Warren E. Halle Martha D. Halle, Partners Other Than the Tax Matters Partner, and Kingstowne L. P. v. Commissioner of Internal Revenue

I respectfully dissent. I would affirm on the reasoning of the Tax Court, see Kings-towne L.P. v. Commissioner, 68 T.C.M. (CCH) 1497, 1994 WL 709347 (1994) (T.C. Memo.1994-630), and I will explain briefly why I believe the Tax Court was exactly right in disallowing the claimed interest deduction.

Kingstowne’s goal, if it could buy Green-dale’s stock, was to turn 1,100 acres owned by Greendale into a residential real estate development. Kingstowne needed, and received, the option to back out of its agreement to buy Greendale’s stock. At the time the Stock Purchase Agreement was signed,…