Howell v. Commissioner

SIBLEY, Circuit Judge.

This case concerns the individual income taxes for the year 1940 of D. F. Howell as respects an item of $27,058.75, which on December 26, 1940, he paid as interest due on a large indebtedness to Howell Turpentine Company which was then in the course of dissolution. Howell owned 85% of the Company’s stock. He in his tax return deducted the payment as interest paid, and the Company in its tax return included it as income received. The Commissioner disallowed the deduction, explaining briefly that “no liability for the payment of such interest existed.” He did not, however,…