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guarantor of the indebtedness between the S corporation and the
bank.
In applying the "substance over form" doctrine in Grojean v.
Commissioner, supra, we did not purport to overrule Raynor v.
Commissioner, supra, or Gilday v. Commissioner, supra. Instead,
we emphasized the distinctions between the lending arrangement in
Grojean and those found to give rise to basis in Raynor and
Gilday. We reasoned that, in Raynor, the taxpayer had borrowed
from a third party and then directly lent the funds to his S
corporation, whereas the taxpayer in Grojean "did not relend the
funds directly to" his S corporation. Grojean v. Commissioner,
supra. In Gilday, we observed, the taxpayer (along with other
shareholders of an S corporation) issued his note to a third-party
bank which thereupon canceled the S corporation's note it held.
In exchange, the S corporation gave its note of the same amount to
the taxpayer (and other shareholders). The result, we noted, was
direct indebtedness of the S corporation to the shareholders in
Gilday, whereas the S corporation in Grojean "was not directly
indebted to petitioner in any way, and petitioner's rights were
against * * * [the bank], not * * * [the S corporation]." Grojean
v. Commissioner, supra.
When the loan arrangements at issue are compared to those in
Grojean v. Commissioner, supra, on the one hand and to those in
Raynor v. Commissioner, supra, and Gilday v. Commissioner, supra,
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