Keating v. Commissioner
United States Tax Court
On their 1978 joint Federal income tax return, petitioners reported a nonbusiness bad debt in the amount of $ 567,424. Under the provisions of sec. 166(d), I.R.C. 1954, as amended, only $ 116,800 thereof was deductible as an offset against petitioners' short-term capital gain.
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On their 1978 joint Federal income tax return, petitioners reported a nonbusiness bad debt in the amount of $ 567,424. Under the provisions of sec. 166(d), I.R.C. 1954, as amended, only $ 116,800 thereof was deductible as an offset against petitioners' short-term capital gain. Held: For purposes of calculating the limitations on investment interest deductions under sec. 163(d), I.R.C. 1954, as amended, nonbusiness bad debts are treated as "investment expenses" only to the extent they are currently deductible. Accordingly, only $ 116,800 of petitioners' nonbusiness bad debts are treated as…
1Opinion of the Court
OPINION
SWIFT, Judge:
In a timely statutory notice of deficiency, respondent determined deficiencies in petitioners’ Federal income tax liabilities and additions to tax for 1978, 1979, and 1980, as follows:
Addition to tax
sec. 6653(a) 1 Deficiency Year
$12,285.30 $245,706 1978
15,114.65 302,293 1979
239,449 1980
After concessions, the sole issue for decision herein is whether and to what extent a nonbusiness bad debt is an investment expense for purposes of calculating the limitations on the deductibility of investment interest under section 163(d).
All of the facts have been stipulated, and this…
2Cases cited11 opinions
- Griffin v. Oceanic Contractors, Inc.Supreme Court of the United States · 1982
- Haggar Co. v. Helvering, Com'r of Internal RevenueSupreme Court of the United States · 1940
- Commissioner v. EngleSupreme Court of the United States · 1984
- J. C. Penney Company, Transferee v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1962
- J. C. Penney Co. v. CommissionerUnited States Tax Court · 1962
6 more not listed; retrieve them via the Exa API.
3Cited by1 opinion
- Keating v. CommissionerUnited States Tax Court · 1987