American Offshore, Inc. v. Commissioner
United States Tax Court
Ps on March 23, 1982, sold several vessels and incidental related property for $ 26 million. The purchaser pledged the vessels as security for a $ 16 million first preferred mortgage. Petitioners received $ 15 million and an $ 11 million promissory note subordinated to the first preferred mortgage in payment.
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Ps on March 23, 1982, sold several vessels and incidental related property for $ 26 million. The purchaser pledged the vessels as security for a $ 16 million first preferred mortgage. Petitioners received $ 15 million and an $ 11 million promissory note subordinated to the first preferred mortgage in payment. They reported the transaction as an installment sale under sec. 453. The industry suffered a drastic downturn before any payments were due, and the vessels declined in value to $ 9 million as of February 1983. Held, the subordinated note became totally worthless as of February 28, 1983.…
1Opinion of the Court
COLVIN, Judge:
In this case we decide whether petitioners are entitled to bad debt deductions under section 1661 in 1983 for an $11 million subordinated promissory note, and for transfers of funds to Offshore Machinery, Inc.
Respondent determined deficiencies in petitioners’ income taxes as follows:
Petitioner
American Offshore, Inc. American Vessels, Inc., & Subsidiaries
Zodiac Offshore, Inc.,
& Subsidiaries
Taxable period ending Sept. 30, 1982 Sept. 30, 1980 Sept. 30, 1982 Feb. 28, 1983 Sept. 30, 1982 Feb. 28, 1983
Deficiency
$513,667
50,558
281,821
146,434
1,299,702
162,372
After concessions, there are…
2Cases cited44 opinions
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- Boehm v. CommissionerSupreme Court of the United States · 1945
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