Mark O. Kaplan - Page 13

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          “loan” to Marc and thereby was exposed to the risk of repaying              
          $204,222 of the Bank loan from his own pocket.  Any such risk to            
          petitioner was illusory.  In the first instance, by virtue of               
          Pleasant Prairie’s and Lakeview’s depositing (cumulatively) the             
          entire $800,000 of the Bank loan proceeds into their Bank                   
          accounts contemporaneously with the Bank’s making the loan, there           
          was no significant risk that the Bank would enforce payment                 
          against petitioner in the event of a default.  Moreover, inasmuch           
          as petitioner wholly owned and controlled these S corporations              
          and their bookkeeping, they obviously were not going to act                 
          adversely to his interests.  In any event, as a result of the               
          December 15, 1998, merger of Marc, Lakeview, and Pleasant Prairie           
          into a new C corporation wholly owned by petitioner, all                    
          purported loan obligations between petitioner and his S                     
          corporations were extinguished; i.e., after the merger,                     
          petitioner purportedly would have owed the new corporation                  
          $800,000, which would have been exactly offset by the $800,000              
          that the new corporation purportedly would have owed petitioner.            
          These circumstances further denote “the inherent lack of                    
          substance in the loans.”  Oren v. Commissioner, T.C. Memo. 2002-            
          172.                                                                        
               In sum, we envision no realistic scenario in which                     
          petitioner’s purported loan to Marc would have or could have made           
          him poorer.  We hold and conclude that petitioner made no                   






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