Media Space, Inc. v. Commissioner
United States Tax Court
P's charter granted its preferred shareholders redemption rights which if exercised triggered obligations by P to pay interest on the redemption amount if P was not able to pay the redemption amount. P and its shareholders entered into several consecutive forbearance agreements by which the shareholders agreed to forgo the redemption elections if they received payments resembling the interest payments.
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P's charter granted its preferred shareholders redemption rights which if exercised triggered obligations by P to pay interest on the redemption amount if P was not able to pay the redemption amount. P and its shareholders entered into several consecutive forbearance agreements by which the shareholders agreed to forgo the redemption elections if they received payments resembling the interest payments. P deducted these payments, and R disallowed the deductions for 2004 and 2005. Held: The payments in question were not interest and therefore were not deductible under sec. 163, I.R.C. Held,…
1Opinion of the Court
OPINION
Goeke, Judge:
Respondent determined deficiencies in petitioner’s income tax for the taxable years 2004 and 2005. The issue for decision is whether payments petitioner made to shareholders to delay redemption of their preferred shares are deductible under section 162 or 163. For the reasons stated herein, we find that the payments are deductible in part under section 162.
Background
Some of the facts have been stipulated and are so found. Petitioner is a Delaware corporation whose principal place of business at the time it filed its petition was Norwalk, Connecticut. Since its…
2Cases cited24 opinions
- New Colonial Ice Co. v. HelveringSupreme Court of the United States · 1934
- Gregory v. HelveringSupreme Court of the United States · 1935
- Deputy, Administratrix v. Du PontSupreme Court of the United States · 1940
- Jack E. Golsen and Sylvia H. Golsen v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1971
- Indopco, Inc. v. CommissionerSupreme Court of the United States · 1992
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