In consolidated cases, fund transfers were not loans but rather distributions valued at the face amounts. The taxpayer (1) bought and sold companies; (2) flipped loans; and (3) started his limited liability company (K1). The transfers were made to K1 and analyzed on being either bona fide loans or distributions. However, the taxpayer received other taxable distributions to the extent the loans were bona fide and the distribution amounts were the face values of the loans. Decisions will be entered under Rule 155.
See full opinion, click: Kelly v. Commissioner, T.C. Memo. 2021-76 (June 28, 2021): Fund Transfers Were Distributions Valued at Face Amounts.
For more information on Kelly v. Commissioner, click here.
Posted by Jessica Ji, Associate Editor, Wealth Strategies Journal.
