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corporations separately). Finally, GXE submitted a Form W-8 to
petitioner on the date the GXE loan agreement was signed.
There is no credible evidence in the record establishing
that GITIC funded the GXE loan.16 If GITIC had been the lender,
the parties easily could have prepared a loan agreement to
reflect that fact. The record does not demonstrate that
petitioner consistently treated the GXE loan as a loan from
GITIC. In fact, petitioner’s tax reporting, its general ledger,
and its loan agreements establish the contrary. We conclude
therefore that petitioner has failed to prove that the loan it
obtained from GXE was, in substance, a loan from GITIC.
2. GXE as an Agent of GITIC
Petitioner argues that GXE acted as GITIC’s agent in making
the GXE loan and, as such, collected interest on the loan for the
benefit of GITIC.
Where a genuine agency relationship exists, the tax
consequences of transactions involving property held by an agent
may be attributed to the principal. Commissioner v. Bollinger,
485 U.S. 340, 349 (1988). An agency relationship, however, does
not automatically result from the fact that a parent corporation
owns and controls its subsidiary. Id. at 346; Natl. Carbide
16Although GITIC presumably capitalized GXE at its inception
in 1985, GXE lent the money in question to petitioner at least 5
years later. There is nothing in the record that indicates GITIC
contributed cash to GXE to enable GXE to make the loan to
petitioner.
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