Benak v. Commissioner
United States Tax Court
In 1972, P bought stock in X which was designed to qualify as sec. 1244, I.R.C. 1954, stock. Later that year, X redeemed and canceled P's shares, issuing P a 1-year, 8-percent promissory note. In 1973, X borrowed funds on which P and others guaranteed payment. In 1974, X became delinquent in its payments on the loan, and in 1975, P made a payment in satisfaction of his obligation under the guaranty.
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In 1972, P bought stock in X which was designed to qualify as sec. 1244, I.R.C. 1954, stock. Later that year, X redeemed and canceled P's shares, issuing P a 1-year, 8-percent promissory note. In 1973, X borrowed funds on which P and others guaranteed payment. In 1974, X became delinquent in its payments on the loan, and in 1975, P made a payment in satisfaction of his obligation under the guaranty. Held, P's payment pursuant to the guaranty gives rise to a nonbusiness bad debt, deductible as a short-term capital loss in the year of payment. Held, further: The note received by P from X does…
1Opinion of the Court
Henry J. Benak and Margaret Benak, Petitioners v. Commissioner of Internal Revenue, Respondent
Benak v. Commissioner
Docket No. 866-79
United States Tax Court
77 T.C. 1213; 1981 U.S. Tax Ct. LEXIS 16;
December 7, 1981, Filed
Decision will be entered for the respondent.
In 1972, P bought stock in X which was designed to qualify as sec. 1244, I.R.C. 1954, stock. Later that year, X redeemed and canceled P's shares, issuing P a 1-year, 8-percent promissory note. In 1973, X borrowed funds on which P and others guaranteed payment. In 1974, X became delinquent in its payments on the loan, and in 1975, P…
2Cases cited24 opinions
- Welch v. HelveringSupreme Court of the United States · 1933
- Deputy, Administratrix v. Du PontSupreme Court of the United States · 1940
- Higgins v. CommissionerSupreme Court of the United States · 1941
- United States v. S. S. White Dental Manufacturing Co.Supreme Court of the United States · 1927
- Whipple v. CommissionerSupreme Court of the United States · 1963
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