Titcher v. Commissioner
United States Tax Court
Held, In accordance with the terms of an agreement of sale in respect of certain real property, $ 100,000 paid to the seller at the time of the execution of the agreement and labeled "prepaid interest" was in fact merely a downpayment and not bona fide deductible interest. There was no existing obligation at that time on which interest could accrue and there was therefore no existing "indebtedness" upon which "interest" was payable.
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Held, In accordance with the terms of an agreement of sale in respect of certain real property, $ 100,000 paid to the seller at the time of the execution of the agreement and labeled "prepaid interest" was in fact merely a downpayment and not bona fide deductible interest. There was no existing obligation at that time on which interest could accrue and there was therefore no existing "indebtedness" upon which "interest" was payable. A note for the purchase price payable to the seller and delivered to the escrow agent did not create any indebtedness until the date of closing when the escrow…
1Opinion of the Court
OPINION
Baum, Judge:
Tbe Commissioner determined deficiencies in petitioners’ income tax as follows:
Petitioner Year Deficiency
Norman and Marjorie Titcher_ 1964 $17, 032. 68
Estate of Harris B. Goldberg, Deceased, Wendy Goldberg, Administratrix, and Wendy Goldberg--- 1964 34, 945. 30
The sole remaining issue is whether $100,000 paid by a subchapter S corporation pursuant to a land sale contract was deductible as “interest” under section 163, I.B.C. 1954. The facts have been stipulated.
Norman and Marjorie Titcher, petitioners in docket No. 2519-69, are husband and wife. They filed a joint Federal…
2Cases cited24 opinions
- 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
- Commissioner v. Court Holding Co.Supreme Court of the United States · 1945
- Knetsch v. United StatesSupreme Court of the United States · 1960
- Old Colony Railroad v. CommissionerSupreme Court of the United States · 1932
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- Resnik v. CommissionerUnited States Tax Court · 1976
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- Durkin v. CommissionerUnited States Tax Court · 1986
- Derr v. CommissionerUnited States Tax Court · 1981
- Landry v. CommissionerUnited States Tax Court · 1986
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