Court Holding Co. v. Comm'r of Internal Revenue

27 Citing cases

  1. Court Holding v. Commr. of Internal Revenue

    143 F.2d 823 (5th Cir. 1944)   Cited 18 times

    Petition for Review of Decision of the Tax Court of the United States (District of Florida). Petition by the Court Holding Company to review a decision of the Tax Court of the United States, 2 T.C. 531, redetermining a deficiency in the tax imposed by the Commissioner of Internal Revenue. Reversed.

  2. Comm'r v. Court Holding Co.

    324 U.S. 331 (1945)   Cited 829 times   1 Legal Analyses
    Holding that the Tax Court was justified in relying on the economic substance doctrine to "attribut[e] the gain from the sale to respondent corporation."

    P. 334. 143 F.2d 823, reversed. CERTIORARI, 323 U.S. 702, to review the reversal of a decision of the Tax Court, 2 T.C. 531, sustaining the Commissioner's determination of a deficiency in income tax.Assistant Attorney General Samuel O. Clark, Jr., with whom Solicitor General Fahy, Messrs.

  3. Lay v. Comm'r of Internal Revenue

    69 T.C. 421 (U.S.T.C. 1977)   Cited 12 times
    In Lay v. Commissioner, 69 T.C. 421 (1977) and Wilkerson v. Commissioner, 70 T.C. 240 (1978), rev'd on other grounds, 655 F.2d 980 (9th Cir. 1981), the court permitted amortization only over the entire term of the loan even though both cases involved separate construction and permanent periods of the loan, separate closings, and separate fees for the construction and permanent periods of the loan.

    Oak Wood deducted in 1971 an allocated portion of the 1.625 percent received by Simmons by prorating the 18-month construction period to the 8-month construction period occurring in 1971. With respect to accrual method taxpayers, interest is deducted as it accrues, which is ratably over the period of the loan; Higginbotham-Bailey-Logan Co. v. Commissioner, 8 B.T.A. 566 (1927); Court Holding Co. v. Commissioner, 2 T.C. 531 (1943), approved and affd. in 324 U.S. 331 (1945); James Brothers Coal Co. v. Commissioner, 41 T.C. 917 (1964). The interest deduction cannot be accelerated by payment in advance.

  4. Resnik v. Comm'r of Internal Revenue

    66 T.C. 74 (U.S.T.C. 1976)   Cited 8 times
    In Resnik, we began our analysis by citing United States v. Basye, 410 U.S. 441, 448 (1973), for the proposition that the partnership is an independently recognizable entity apart from its partners for the purposes of the calculation of its taxable income under section 703.

    Petitioner's assertion is based on three alternative grounds: (1) The San Jose Co. partnership's taxable income was not materially distorted by the interest payment; (2) even if the partnership's taxable income was materially distorted, petitioner's income was not materially distorted; and (3) disallowance of the interest expense and resulting loss would result in an inaccurate reflection of petitioners' income because they report their income and claim their deductions on the cash receipts and disbursements method of accounting. Petitioners rely on John D. Fackler, 39 B.T.A. 395 (1939); Court Holding Co., 2 T.C. 531 (1943), revd. and remanded 143 F.2d 823 (5th Cir. 1944), revd. 324 U.S. 331 (1945); L. Lee Stanton, 34 T.C. 1 (1960), to support their contention that prepaid interest is deductible and that a denial of the deduction would improperly place taxpayer on the accrual method of accounting as to that item on their return while leaving them on the cash method of accounting as to the other items on the return. Respondent contends that the prepaid interest should be disallowed because it results in a material distortion of both the partnership income and petitioners' taxable income.

  5. Sandor v. Comm'r of Internal Revenue

    62 T.C. 469 (U.S.T.C. 1974)

    In John D. Fackler, 39 B.T.A. 395 (1939), the Board of Tax Appeals allowed deductions of prepaid interest that were motivated by sound business reasons. And in Court Holding Co., 2 T.C. 531 (1943), the Tax Court also allowed deductions for prepaid interest, relying almost entirely on the Fackler case for its conclusion. Apparently as a result of these cases, respondent, in 1945, issued I.T. 3740, 1945 C.B. 109, which stated that a cash basis taxpayer may deduct interest paid in advance for a period of 5 years in the year in which paid, but that an accrual basis taxpayer could deduct prepaid interest only in the year in which the liability to pay accrues irrespective of when payment was actually made.

  6. Sandor v. Commissioner of Internal Revenue

    62 T.C. 469 (U.S.T.C. 1974)

    In John D. Fackler, 39 B.T.A. 395 (1939), the Board of Tax Appeals allowed deductions of prepaid interest that were motivated by sound business reasons. And in Court Holding Co., 2 T.C. 531 (1943), the Tax Court also allowed deductions for prepaid interest, relying almost entirely on the Fackler case for its conclusion. Apparently as a result of these cases, respondent, in 1945, issued I.T. 3740, 1945 C.B. 109, which stated that a cash basis taxpayer may deduct interest paid in advance for a period of 5 years in the year in which paid, but that an accrual basis taxpayer could deduct prepaid interest only in the year in which the liability to pay accrues irrespective of when payment was actually made.

  7. L-R Heat Treating Co. v. Comm'r of Internal Revenue

    28 T.C. 894 (U.S.T.C. 1957)   Cited 17 times

    These cases pointed out that Congress intended that the word be accorded the usual, ordinary, and everyday meaning in the affairs of business. We had almost identical facts before us concerning one of the issues in Court Holding Co., 2 T.C. 531, reversed on another issue 143 F.2d 823, reversed 324 U.S. 331. The issue about which we are interested was not the subject of appeal.

  8. Mississippi Chemical Corp. v. United States

    431 F.2d 1320 (5th Cir. 1970)   Cited 3 times

    Old Colony R.R. v. Commissioner of Internal Revenue, 284 U.S. 552, 560, 52 S.Ct. 211, 213, 76 L.Ed. 484 (1932). Wiggin Terminals, Inc. v. United States, 36 F.2d 893 (1st Cir. 1929); L-R Heat Treating Co. v. Commissioner of Internal Revenue, 28 T.C. 894 (1957); Court Holding Co. v. Commissioner of Internal Revenue, 2 T.C. 531, 536 (1943), rev'd on other grounds, 143 F.2d 823 (5th Cir. 1944), court of appeals rev'd and tax court aff'd on other grounds, 324 U.S. 331, 65 S.Ct. 707, 89 L.Ed. 567 (1945). These cases are offered for the same proposition by the Court of Claims in Penn Yan. 417 F.2d at 1379.

  9. PENN YAN AGWAY COOP., INC. v. UNITED STATES

    417 F.2d 1372 (Fed. Cir. 1969)   Cited 8 times
    In Penn Yan Agway Cooperative, Inc. v. United States, 417 F.2d 1372 (Ct.Cl. 1969), the Court of Claims held that amounts paid for Class C shares of the Springfield Bank for Cooperatives under the "interest override" requirements were currently deductible as interest.

    A bonus or premium paid by a taxpayer to induce a loan has been held to be deductible as interest within the meaning of the pertinent section of the federal income tax statutes. Wiggin Terminals, Inc. v. United States, 36 F.2d 893 (1st Cir. 1929) (Payment of $50,000 cash bonus); L-R Heat Treating Co., 28 T.C. 894 (1957) ($61,200 withheld from amounts paid to borrower as premiums for making loans); Court Holding Co. v. Commissioner, 2 T.C. 531, 536 (1943), rev'd on other grounds, 143 F.2d 823 (5th Cir. 1944), circuit court rev'd and tax court aff'd on the other grounds, 324 U.S. 331, 65 S.Ct. 707, 89 L.Ed. 567 (1945) (Payment of $350 cash bonus). In each of these cases, the borrower in effect parted with additional money, over and above the agreed interest rate, and for such additional payments, received nothing in return other than the use of the lender's money.

  10. M.F.A. Central Cooperative v. Bookwalter

    286 F. Supp. 956 (E.D. Mo. 1968)   Cited 5 times
    In M.F.A. Central Cooperative v. Bookwalter, 286 F. Supp. 956 (E.D.Mo. 1968), the district court allowed current deduction of the cost of Class C shares in the St. Louis Bank for Cooperatives, but considered it an ordinary and necessary business expense rather than interest.

    If this amount spent on Class C stock is to be considered interest, it would seem that it would be in the nature of a bonus paid for the loan. Several cases have held that a bonus paid to induce a loan was interest within the meaning of the Internal Revenue Code. Wiggin Terminals, Inc., 36 F.2d 893 (1st Cir. 1929) (payment of $50,000 cash bonus); L-R Heat Treating Co., 28 T.C. 894 (1957) ($61,200 withheld from amount paid to borrower, "as premium for making loan"); Court Holding Co., 2 T.C. 531 (1943), rev'd on other grounds, 143 F.2d 823 (5th Cir. 1944), aff'd on other grounds, 324 U.S. 331, 65 S.Ct. 707, 89 L.Ed. 567 (1945) (payment of $350 cash bonus). These cases are distinguishable from the present matter, because in each of the cited cases the debtor parted with the additional money and received nothing in return other than the use of the lender's money.