State-Adams Corp. v. Commissioner
United States Tax Court
In order to obviate anticipated difficulties with regard to the devolution of title to a valuable piece of Chicago real estate leased on a long-term "net lease" to a department store, petitioner corporation was organized to hold title to such real estate (and lease). It was not intended that petitioner would exercise any substantial business function with regard to this property or otherwise, and petitioner did not actually engage in business after its organization.
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In order to obviate anticipated difficulties with regard to the devolution of title to a valuable piece of Chicago real estate leased on a long-term "net lease" to a department store, petitioner corporation was organized to hold title to such real estate (and lease). It was not intended that petitioner would exercise any substantial business function with regard to this property or otherwise, and petitioner did not actually engage in business after its organization. Its only activities were the holding of title to such real estate, the taking of steps necessary to continue its own corporate…
1Opinion of the Court
OPINION.
KeRn, Judge:
Tlie deficiency involved in this case results from the respondent’s determination that the so-called interest payments here involved, although in form the payments of interest called for by promissory notes, were, as a matter of economic reality and for Federal income tax purposes, the distributions of income to the investors of equity capital, and were therefore not deductible as interest under section 23 (b) of the Internal Revenue Code of 1939. The petitioner on brief does not contend that these payments constituted deductible payments of interest. Its argument is that…
2Cases cited9 opinions
- Paymer v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1945
- Langdon L. Skarda, Carolyn A. Skarda, Lynell G. Skarda, Kathryn B. Skarda, Cash T. Skarda and Annabel S. Skarda v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1957
- Howard A. Jackson and Elizabeth D. Jackson v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1956
- Skarda v. CommissionerUnited States Tax Court · 1956
- Given v. CommissionerCourt of Appeals for the Eighth Circuit · 1956
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3Cited by1 opinion
- State-Adams Corp. v. CommissionerUnited States Tax Court · 1959