Hunt Foods & Industries, Inc. v. Commissioner
United States Tax Court
The petitioner sold its convertible debentures for a price which equaled or exceeded their stated redemption values. In this proceeding, it claimed a deduction for bond discount with respect to such debentures for 1962 and 1963. The claimed discount arose because the petitioner subtracted an amount equal to the value of the conversion privilege from the total price paid for each debenture.
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The petitioner sold its convertible debentures for a price which equaled or exceeded their stated redemption values. In this proceeding, it claimed a deduction for bond discount with respect to such debentures for 1962 and 1963. The claimed discount arose because the petitioner subtracted an amount equal to the value of the conversion privilege from the total price paid for each debenture. However, under secs. 1.163-3(a)(1) and 1.1232-3(b)(2)(i), Income Tax Regs., the issue price of a convertible debenture includes any amount paid in respect of the conversion privilege for purposes of…
1Opinion of the Court
Simpson, Judge:
Tbe respondent determined deficiencies in tbe petitioner’s Federal income tax of $803,786.42 for the taxable year ended June 80, 1962, and $572,199 for tbe taxable year ended June 30,1963. In bis amended answer, the respondent claimed an additional deficiency of $107,389.40 for 1963. Most of tbe issues in tbe case have been settled; the one issue remaining for decision is whether a corporation which issues convertible debentures at par may allocate part of tbe proceeds to the conversion privilege with tbe result that tbe debentures are considered to be issued at a discount…
2Cases cited19 opinions
- Deputy, Administratrix v. Du PontSupreme Court of the United States · 1940
- Old Colony Railroad v. CommissionerSupreme Court of the United States · 1932
- Manhattan General Equipment Co. v. Commissioner of Internal RevenueSupreme Court of the United States · 1936
- American Automobile Assn. v. United StatesSupreme Court of the United States · 1961
- Schulde v. CommissionerSupreme Court of the United States · 1963
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3Cited by14 opinions
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- Seaboard Coffee Service, Inc. v. CommissionerUnited States Tax Court · 1978
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