Sabine Royalty Corp. v. Commissioner

OPINION.

Issue 1.

Johnson, Judge:

Petitioner claims that payments to income debenture holders were, in fact, interest payments and deductible under section 23 (b), Internal Revenue Code. Respondent has determined that these amounts were paid as dividends, and has therefore disallowed the interest deductions.

A number of criteria must be taken into consideration before determining whether a certain security is in fact a form of capital stock or evidence of indebtedness. John Kelley Co., 1 T. C. 457, 462, affd. 326 U. S. 521; New England Lime Co., 13 T. C. 799. No single factor is necessarily…