Ezel / IRS Rulings / 201041040

CCA 201041040: A purported securities loan did not create indebtedness under section 1366

Number
201041040
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Pass-Thru of Items to Shareholders
Topics
S corporations
Code sections
§ 1366, § 6110
Ruling dated
September 27, 2010
Publicly released
October 15, 2010
Source
View Official PDF

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This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2010, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2010
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel’s advice considers whether a purported loan of securities created indebtedness for purposes of section 1366(d)(1)(B). The advice concludes that the transaction did not create that indebtedness. It relies on Deputy v. Du Pont and several revenue rulings addressing related obligations and securities transactions.

Ruling snapshot

  • Question: Did a purported loan of securities create indebtedness for purposes of section 1366(d)(1)(B)?
  • Outcome: Advice given
  • Key authorities: IRC § 1366; IRC § 6110(k)(3); Deputy v. Du Pont, 308 U.S. 488 (1940); Rev. Ruls. 95-45, 95-26, and 95-8

Full text (IRS public release)

ID: CCA_2010092710381451 Number: 201041040
Release Date: 10/15/2010
Office: ----------------
UILC: 1366.00-00

From: -------------------
Sent: Monday, September 27, 2010 10:38:17 AM
To: -----------------
Cc: ------------------------
Subject: Section 1366 Indebtedness

We believe that the purported loan of securities at issue here did not create indebtedness for purposes of
section 1366(d)(1)(B). See Deputy v. Du Pont, 308 U.S. 488 (1940) (obligation to close a short sale was
not indebtedness). See also Rev. Rul. 95-45, 1995-26 I.R.B. 4; Rev. Rul. 95-26, 1995-14 I.R.B. 6; Rev.
Rul. 95-8, 1995-4 I.R.B. 29.

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