John W. Walter, Inc. v. Commissioner
United States Tax Court
1. On facts, issuance of petitioner's debentures held to have been supported by consideration rendering them valid corporate obligations. 2. Interest on debentures, designated as such, payable in 10 years with fixed interest rate of 3 1/2 per cent and no accompanying rights of management, issued by petitioner corporation in exchange for valuable property without excessive relation to equity investment held, further, deductible as interest on indebtedness.
1Opinion of the Court
OPINION.
Oppek, Judge:
Eegardless of whether consideration is a true prerequisite to the deductibility of interest where a distribution1 to stockholders of bonds valid on their face does not concededly constitute a gift,2 as this case is presented our finding of fact3 that petitioner received valuable consideration for the issuance of its debentures disposes of the issue in petitioner’s favor.
Petitioner was organized in December 1945 and commenced its operations in January 1946. Prior to these dates, as early as July 1945, Walter was notified that he had been awarded the Stewart-Warner…
2Cases cited8 opinions
- Bazley v. CommissionerSupreme Court of the United States · 1947
- Commissioner of Internal Revenue v. OPP Holding Corp.Court of Appeals for the Second Circuit · 1935
- 1432 Broadway Corp. v. Commissioner of Internal Rev.Court of Appeals for the Second Circuit · 1947
- Mullin Bldg. Corp. v. CommissionerUnited States Tax Court · 1947
- Thompson v. Commissioner of Internal Revenue. Couse v. Commissioner of Internal RevenueCourt of Appeals for the Third Circuit · 1953
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3Cited by1 opinion
- John W. Walter, Inc. v. CommissionerUnited States Tax Court · 1954