Lay v. Commissioner
United States Tax Court
Held: 1. Loan fees characterized as interest, which were paid by two accrual method partnerships in the nature of a loan discount from the principal amounts of 40-year loans, must be prorated over the entire life of each loan regardless of when the fees were actually paid. 2. A 2-percent financing fee paid by both partnerships to a mortgage banking firm was for services rendered and, therefore, is not deductible as interest in 1971. 3. The reimbursement to a partner of a…
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Held: 1. Loan fees characterized as interest, which were paid by two accrual method partnerships in the nature of a loan discount from the principal amounts of 40-year loans, must be prorated over the entire life of each loan regardless of when the fees were actually paid. 2. A 2-percent financing fee paid by both partnerships to a mortgage banking firm was for services rendered and, therefore, is not deductible as interest in 1971. 3. The reimbursement to a partner of a FNMA preliminary commitment fee paid by him represents the cost incurred in securing a loan and, similarly, is not…
1Opinion of the Court
Dawson, Judge:
Respondent determined a deficiency in petitioners’ Federal income tax for the year 1971 in the amount of $12,749.33. Petitioner-husband is a limited partner in two partnerships that each constructed and operated a section 236 housing project under the National Housing Act. At issue is whether certain financing fees paid by these two accrual method partnerships are deductible as ordinary and necessary business expenses under section 1621 or as interest under section 163 in the year of their respective accruals. Some concessions have been made by the petitioners.
FINDINGS OF FACT
Som…
2Cases cited18 opinions
- Deputy, Administratrix v. Du PontSupreme Court of the United States · 1940
- Commissioner v. Court Holding Co.Supreme Court of the United States · 1945
- Old Colony Railroad v. CommissionerSupreme Court of the United States · 1932
- Court Holding Co. v. CommissionerUnited States Tax Court · 1943
- Higginbotham-Bailey-Logan Co. v. CommissionerUnited States Board of Tax Appeals · 1927
13 more not listed; retrieve them via the Exa API.
3Cited by33 opinions
- Goodwin v. CommissionerUnited States Tax Court · 1980
- Prabel v. CommissionerUnited States Tax Court · 1988
- Duncan Industries, Inc., etc. v. CommissionerUnited States Tax Court · 1979
- Wilkerson v. CommissionerUnited States Tax Court · 1978
- Derr v. CommissionerUnited States Tax Court · 1981
28 more not listed; retrieve them via the Exa API.