Benjamin and Helen Stratmore v. Commissioner of Internal Revenue Service

OPINION OF THE COURT

WEIS, Circuit Judge.

The Tax Court determined the taxpayers were not entitled to deduct interest which they had paid as guarantors on notes of corporations that had been discharged in bankruptcy. We conclude that because the taxpayers had a direct and fixed obligation to pay the notes and had no recourse • against the corporations, the interest is properly deductible under the Internal Revenue Code. Accordingly, we will reverse the decision of the Tax Court.

After a remand from this court, B.B. Rider Corp. v. Commissioner, 725 F.2d 945 (3d Cir.1984), the Tax Court reaffirmed…