Principal Issues: Can a corporation, when determining whether interest is deductible on money borrowed to pay a dividend, ignore, that is, reverse, a reduction to retained earnings caused by the application paragraphs .08 and .09 of Section 3840 of the CICA Handbook to a taxable-related-party transaction?
Position: Generally no, but not enough information to conclude on the application of the "fill the hole" concept.
Reasons: Matter should be determined in the context of an advance income tax ruling request submitted in accordance with IC 70-6R5 or, if the transaction is completed, by submission to the appropriate TSO.