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plan, but the alleged approach is not unreasonable on its face.
Nothing in the record suggests that Comerica did not, as of the
date of the loan, intend to operate in accordance with this form.
Notably, the pledge agreement expressly entitled Mr. Gleason to
receive dividends and distributions. Suffice it to say that
repayments sourced from the S corporations would go farther in
overcoming the form of the loan had they occurred prior to the
almost certain shock and probable visceral every-man-for-himself
reaction provoked by a spectacular and unexpected commercial
failure.
Moreover, the Court’s recent opinion in Ruckriegel v.
Commissioner, T.C. Memo. 2006-78, is instructive in this regard.
That case involved taxpayers who were shareholders in an S
corporation and partners in a partnership. The partnership made
various borrowings from a bank and advanced funds to the S
corporation in transactions taking one of two forms. Id. Most
of the advances were accomplished by means of checks written
directly from the partnership to the corporation; however,
certain of the advances were structured as back-to-back wire
transfers from the partnership to the taxpayers and then from the
taxpayers to the S corporations. Id. With respect to both
scenarios, principal and interest payments were made directly
from the S corporation to the partnership. Id. The taxpayers
argued that all transactions should be treated in substance as
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