Ball v. Commissioner
United States Tax Court
Petitioners owned tax-exempt securities at the same time they incurred certain indebtedness to finance business ventures. Held, the interest on the indebtedness is allowable as a deduction. Sec. 265(2), I.R.C. 1954, is inapplicable since there was no "sufficiently direct relationship" between the incurrence or continuation of the debt and the carrying of the tax-exempt securities.
1Opinion of the Court
OPINION
We must decide if certain interest deductions claimed by petitioners in 1962, 1963, and 1964 are barred by section 265(2) which provides:
SEC. 265. EXPENSES AND INTEREST RELATING TO TAX-EXEMPT INCOME.
No deduction shall be allowed for—
* * ⅜ * ⅜ ⅜ *(2) Interest. — Interest on indebtedness incurred or continued to purchase or carry obligations ⅜ ⅞ ⅝ the interest on which is wholly exempt from the taxes imposed by this subtitle.
The Commissioner argues that petitioner is within the scope of section 265 (2) since he held tax-exempt securities at the same time he borrowed to make investments.…
2Cases cited8 opinions
- Denman v. SlaytonSupreme Court of the United States · 1931
- United States v. Atlas Life Insurance Co.Supreme Court of the United States · 1965
- The Wisconsin Cheeseman, Inc. v. United StatesCourt of Appeals for the Seventh Circuit · 1968
- John E. Leslie and Evelyn G. Leslie v. Commissioner of the Internal RevenueCourt of Appeals for the Second Circuit · 1969
- Illinois Terminal Railroad Company v. The United StatesUnited States Court of Claims · 1967
3 more not listed; retrieve them via the Exa API.
3Cited by21 opinions
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- Israelson v. United StatesDistrict Court, D. Maryland · 1973
- Ellis I. And Nelle S. Levitt, Appellants-Appellees v. United States of America, Appellees-AppellantsCourt of Appeals for the Eighth Circuit · 1975
- Investors Diversified Services, Inc. v. United StatesUnited States Court of Claims · 1978
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