Lynch v. Commissioner
United States Tax Court
In 1953 the principal petitioner "purchased" $ 650,000-face-value United States Treasury bonds from Livingstone & Co. for $ 564,687.50. Petitioner "borrowed" $ 653,250 from Gail Finance Corporation (GFC) to finance the bond "purchase." GFC was to send $ 564,687.50 directly to Livingstone & Co. Petitioner executed a nonrecourse note for the "loan" in favor of GFC and "pledged" the bonds as security.
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In 1953 the principal petitioner "purchased" $ 650,000-face-value United States Treasury bonds from Livingstone & Co. for $ 564,687.50. Petitioner "borrowed" $ 653,250 from Gail Finance Corporation (GFC) to finance the bond "purchase." GFC was to send $ 564,687.50 directly to Livingstone & Co. Petitioner executed a nonrecourse note for the "loan" in favor of GFC and "pledged" the bonds as security. GFC "sold short" to or through Livingstone & Co. $ 650,000-face-value United States Treasury bonds in order to have sufficient funds to "loan" to petitioner. Petitioner, utilizing an $ 80,000 loan…
1Opinion of the Court
Bruce, Judge:
Tins proceeding involves a deficiency in income tax of $79,881.32 for 1953. The only issue is whether petitioner is entitled to deduct $117,677.11 as interest expense for 1953 pursuant to section 23(b), I.R.C. 1939.
FINDINGS OF FACT.
During the year in issue the principal petitioner, George G. Lynch, and his wife, Marian, resided in Forestville, Connecticut. They filed a joint income tax return for the year 1953 with the district director of internal revenue for the district of Connecticut. Petitioners reported their income on the cash basis.
In 1953 petitioner was an executive of…
2Cases cited11 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- Commissioner v. Court Holding Co.Supreme Court of the United States · 1945
- Higgins v. SmithSupreme Court of the United States · 1940
- Old Colony Railroad v. CommissionerSupreme Court of the United States · 1932
- Doyle v. Mitchell Brothers Co.Supreme Court of the United States · 1918
6 more not listed; retrieve them via the Exa API.
3Cited by67 opinions
- Karme v. CommissionerUnited States Tax Court · 1980
- Stanton v. CommissionerUnited States Tax Court · 1960
- Bridges v. CommissionerUnited States Tax Court · 1963
- Lynch v. CommissionerCourt of Appeals for the Second Circuit · 1959
- Derr v. CommissionerUnited States Tax Court · 1981
62 more not listed; retrieve them via the Exa API.