Eastern Service Corporation v. Commissioner of Internal Revenue

OAKES, Circuit Judge:

This appeal by the Commissioner from an adverse ruling of the Tax Court presents the somewhat abstruse question whether a “seller-servicer” of. mortgages required to buy Federal National Mortgage Association (FNMA) stock as a seller, and to retain it as a servicer, is entitled to deduct as a business expense a portion of the price it paid for the FNMA stock by virtue of section 162(d) of the Internal Revenue Code. The Tax Court, Richard C. Wilbur, Judge, held that the statutory reference in section 162(d) to “fair market value” mandates that the ownership requirement on…