Motel Corp. v. Commissioner
United States Tax Court
Held: 1. Certain payments made by the petitioner to its shareholders are not deductible by it as interest inasmuch as such payments were made in respect of capital contributions and not in respect of debt. 2. Amounts credited to the payment of overdue interest are interest income. 3. The petitioner, a personal holding company, is not entitled to any dividends-paid deductions in computing its undistributed personal holding company income for the taxable years in question,…
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Held: 1. Certain payments made by the petitioner to its shareholders are not deductible by it as interest inasmuch as such payments were made in respect of capital contributions and not in respect of debt. 2. Amounts credited to the payment of overdue interest are interest income. 3. The petitioner, a personal holding company, is not entitled to any dividends-paid deductions in computing its undistributed personal holding company income for the taxable years in question, since it has failed to show that dividends paid by it were not preferential. 4. The petitioner may not deduct additional…
1Opinion of the Court
OPINION
Issue 1. Interest Deduction
Tbe petitioner contends that the advances in the amount of $170,000 made to it by Messrs. Ackerman and Traub in 1958 and 1959 were loans. Accordingly, it argues that payments made by it with respect to such advances in the tax years 1962 and 1963 are deductible as interest. On the other hand, the respondent contends that the advances were not loans but rather contributions to capital, and accordingly, payments made with respect to such advances were merely distributions with respect to stock and not deductible by the petitioner.
The fact that the advances were…
2Cases cited23 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- Deputy, Administratrix v. Du PontSupreme Court of the United States · 1940
- Fin Hay Realty Co. v. United StatesCourt of Appeals for the Third Circuit · 1968
- Vassallo v. CommissionerUnited States Tax Court · 1955
- Plunkett v. Commissioner of Internal RevenueCourt of Appeals for the First Circuit · 1941
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3Cited by28 opinions
- Hradesky v. CommissionerUnited States Tax Court · 1975
- Riss v. CommissionerUnited States Tax Court · 1971
- Mathews v. CommissionerUnited States Tax Court · 1973
- Tampa & G. C. R. Co. v. CommissionerUnited States Tax Court · 1971
- Family Group, Inc. v. CommissionerUnited States Tax Court · 1973
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