Midkiff v. Commissioner
United States Tax Court
The Hawaii Housing Authority designated P-lessee's lot for acquisition and filed a complaint in eminent domain against L-lessor to acquire the lot. In settlement of that action, P paid to L the value of the lot as of the date of designation plus blight of summons damages at the rate of 5 percent per annum on that amount from the date of valuation to the date of closing.
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The Hawaii Housing Authority designated P-lessee's lot for acquisition and filed a complaint in eminent domain against L-lessor to acquire the lot. In settlement of that action, P paid to L the value of the lot as of the date of designation plus blight of summons damages at the rate of 5 percent per annum on that amount from the date of valuation to the date of closing. Held, the 5-percent additional amount was not paid on indebtedness within the meaning of I.R.C. sec. 163(a) and is not deductible as interest under that section.
1Opinion of the Court
OPINION
COHEN, Judge:
Respondent determined a deficiency of $40,635 in petitioners’ Federal income tax for 1986. The sole issue for decision is whether petitioners are entitled to an interest expense deduction under section 163(a) for an amount paid incident to petitioners’ purchase of a fee-simple interest in residential real property in settlement of condemnation proceedings commenced under the Hawaii Land Reform Act of 1967, Haw. Rev. Stat. ch. 516 (HLRA).
Unless otherwise indicated, all section references are to the Internal Revenue Code as amended and in effect for the year in issue. All of…
2Cases cited30 opinions
- New Colonial Ice Co. v. HelveringSupreme Court of the United States · 1934
- Deputy, Administratrix v. Du PontSupreme Court of the United States · 1940
- Hawaii Housing Authority v. MidkiffSupreme Court of the United States · 1984
- Knetsch v. United StatesSupreme Court of the United States · 1960
- Alan B. Karme and Laila M. Karme v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1982
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