Johnson v. Commissioner
United States Board of Tax Appeals
Petitioner, having placed corporate stock in the names of several sisters, with the stated intention of having the income paid to them, retaining in her own possession the stock certificates endorsed in blank; and thereafter having "borrowed" the proceeds of the redemption of such stock with an agreement that she would pay "interest" thereon in stipulated amounts to the respective sisters during their natural lives, held not to be entitled to deduct such amounts as interest…
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Petitioner, having placed corporate stock in the names of several sisters, with the stated intention of having the income paid to them, retaining in her own possession the stock certificates endorsed in blank; and thereafter having "borrowed" the proceeds of the redemption of such stock with an agreement that she would pay "interest" thereon in stipulated amounts to the respective sisters during their natural lives, held not to be entitled to deduct such amounts as interest paid, there being no true indebtedness within the meaning of the Revenue Act of 1934, section 23(b).
1Opinion of the Court
*707OPINION.
Opper :
The actual issue is whether petitioner is entitled to deduct as “interest paid on indebtedness”1 payments to her sisters as the result of an agreement pursuant to which she undertook “to pay the trust the sum of $2,625 per year as long as you live as interest upon said money.” The “trust” referred to was an arrangement whereby the dividends on certain stock or the income from the proceeds thereof were to be paid to the respective sisters for their lives; and the “said money” was the proceeds of the redemption of such stock which petitioner used for the satisfaction of her own…
2Cases cited6 opinions
- Lucas v. EarlSupreme Court of the United States · 1930
- Corliss v. BowersSupreme Court of the United States · 1930
- Burnet v. LeiningerSupreme Court of the United States · 1932
- Hegeman v. . MoonNew York Court of Appeals · 1892
- Kidd v. Puritana Cereal Food Co.Missouri Court of Appeals · 1909
1 more not listed; retrieve them via the Exa API.
3Cited by3 opinions
- Johnson v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1939
- Dourif v. CommissionerUnited States Tax Court · 1943
- Johnson v. CommissionerUnited States Board of Tax Appeals · 1939