Beck v. Comm'r
United States Tax Court
Petitioners acquired interests in two limited partnerships. The partnerships in turn acquired legal title to certain undeveloped real estate at prices very substantially in excess of the acquisition cost to the seller less than 1 week earlier. By nonrecourse obligations to an intermediate entity, the partnerships obtained funds originating with the seller with which to pay "points" on nonrecourse purchase-money obligations.
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Petitioners acquired interests in two limited partnerships. The partnerships in turn acquired legal title to certain undeveloped real estate at prices very substantially in excess of the acquisition cost to the seller less than 1 week earlier. By nonrecourse obligations to an intermediate entity, the partnerships obtained funds originating with the seller with which to pay "points" on nonrecourse purchase-money obligations. Held, the respective arrangements between the seller, the intermediate "lender," and the partnerships did not give rise to bona fide indebtedness sufficient to support…
1Opinion of the Court
Nims, Judge:
Respondent determined a deficiency in petitioners’ income taxes for the year 1974 of $29,067. The substantive issue remaining for our decision is whether deductions for loan points and prepaid interest claimed in 1974 by two limited partnerships, Moreno Co. Two and Riverside Two, are allowable under section 163(a).1 Should we find against respondent on this issue, we must decide:(1) Whether deductions claimed by Moreno Co. Two and Riverside Two in 1974 for prepaid interest and loan points caused a material distortion of income and whether, pursuant to section 446(b), the claimed…
2Cases cited25 opinions
- Welch v. HelveringSupreme Court of the United States · 1933
- Jack E. Golsen and Sylvia H. Golsen v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1971
- Knetsch v. United StatesSupreme Court of the United States · 1960
- Johnny Weimerskirch v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1979
- Estate of Charles T. Franklin, Deceased v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1976
20 more not listed; retrieve them via the Exa API.
3Cited by62 opinions
- Brannen v. CommissionerUnited States Tax Court · 1982
- Grodt & McKay Realty, Inc. v. CommissionerUnited States Tax Court · 1981
- Siegel v. CommissionerUnited States Tax Court · 1982
- Flowers v. CommissionerUnited States Tax Court · 1983
- Fox v. CommissionerUnited States Tax Court · 1983
57 more not listed; retrieve them via the Exa API.