Indiana University Retirement Community, Inc. v. Commissioner
United States Tax Court
The city of Bloomington, Indiana, issued municipal bonds, the proceeds of which were to be used by P, a tax-exempt private foundation, to build retirement community facilities. During construction, P earned dividends and interest of $ 1,125,278 in 1982 and $ 226,505 in 1983 by investing the proceeds.
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The city of Bloomington, Indiana, issued municipal bonds, the proceeds of which were to be used by P, a tax-exempt private foundation, to build retirement community facilities. During construction, P earned dividends and interest of $ 1,125,278 in 1982 and $ 226,505 in 1983 by investing the proceeds. P also earned capital gains of $ 18,200 in 1983. In 1982 and 1983, P paid the interest due and payable on the debt underlying the bonds in the amounts of $ 1,348,447 for 1982 and $ 1,634,530 for 1983. Held, P may deduct the interest expense it paid on the debt underlying the bond issue from its…
1Opinion of the Court
OPINION
WILLIAMS, Judge:
The Commissioner determined deficiencies in petitioner’s excise tax pursuant to section 49401 for 1982 and 1983 in the amounts of $22,446 and $4,834, respectively. The issue we must decide is whether petitioner may deduct certain interest expense from its “gross investment income” as defined in section 4940 to compute “net investment income.”
All of the facts in this case have been stipulated pursuant to Rule 122, Tax Court Rules of Practice and Procedure, and are so found. Petitioner is an Indiana not-for-profit corporation, incorporated in 1977. Petitioner was an…
2Cases cited6 opinions
- United States v. GilmoreSupreme Court of the United States · 1963
- Lykes v. United StatesSupreme Court of the United States · 1952
- Stubbs, Overbeck & Associates, Inc. v. United StatesCourt of Appeals for the Fifth Circuit · 1971
- Lettie Pate Whitehead Foundation, Inc., Cross-Appellant v. United States of America, Cross-AppelleeCourt of Appeals for the Fifth Circuit · 1979
- Julia R. & Estelle L. Foundation, Inc. v. CommissionerUnited States Tax Court · 1978
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3Cited by3 opinions
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- Indiana University Retirement Community, Inc. v. CommissionerUnited States Tax Court · 1989