Brown v. Commissioner

OPINION.

Rice, Judge:

Petitioners argue that a cash gift of $32,500 was made by William H. Brown to his two children on September 8,1947; that such cash was used to redeem the 74 notes which the 1937 deed of trust secured; and that the subsequent exchange of such notes for petitioner’s personal notes in 1949 resulted in a bona fide debt owed by him to his children, on which petitioners are entitled to deduct interest payments made during the years in issue.

In support of his determination disallowing such deductions, the respondent argues that the substance of the transactions created no bona…