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(1958), 1958-3 C.B. 922, 1141), thereby incurring a true “cost”,
Borg v. Commissioner, 50 T.C. 257, 263 (1968).
In general, no form of indirect borrowing, e.g., guaranty,
surety, accommodation, comaking, pledge of collateral, etc., will
give rise to the requisite economic outlay unless, until, and to
the extent that the shareholder pays all or part of the
obligation. Maloof v. Commissioner, supra at 649-650; Uri v.
Commissioner, 949 F.2d 371, 373 (10th Cir. 1991), affg. T.C.
Memo. 1989-58; Estate of Leavitt v. Commissioner, supra at 422;
Brown v. Commissioner, supra at 757; Raynor v. Commissioner, 50
T.C. 762, 770-771 (1968). The Court of Appeals for the Eleventh
Circuit7 recognizes a limited exception to this rule, permitting
a shareholder’s guaranty of a loan to an S corporation to effect
an increase in basis “‘where the lender looks to the shareholder
as the primary obligor’”. Sleiman v. Commissioner, 187 F.3d
1352, 1357 (11th Cir. 1999) (quoting Selfe v. United States, 778
7 The petition filed in this case recites: “The
petitioner’s [sic] mailing address for all correspondence now at:
P.O. Box 8173, Kentwood, MI 49518-8173; and with legal residence
now at: P.O. Box 507, Long Beach, MS 39560”. Petitioners
designated Detroit, Michigan, as the place of trial. Residence
in Mississippi would generally imply the Court of Appeals for the
Fifth Circuit as the appropriate venue for appeal. See sec.
7482(b)(1)(A). Nonetheless, the procedural history of this
litigation suggests a reasonable possibility of an agreement to
alter venue of appeal to the Court of Appeals for the Sixth
Circuit. See sec. 7482(b)(2). In these circumstances, the Court
will take into account all potentially germane precedent. See
Golsen v. Commissioner, 54 T.C. 742, 757 (1970), affd. 445 F.2d
985 (10th Cir. 1971).
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