Colonial Sav. Asso. v. Commissioner
United States Tax Court
P, a savings and loan association, was entitled to receive penalties from depositors because of premature withdrawals from their accounts. P generally credited depositors' accounts with compound interest on a daily basis. Depositors were entitled to withdraw the interest, but incurred a penalty if principal was withdrawn before maturity of the certificate.
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P, a savings and loan association, was entitled to receive penalties from depositors because of premature withdrawals from their accounts. P generally credited depositors' accounts with compound interest on a daily basis. Depositors were entitled to withdraw the interest, but incurred a penalty if principal was withdrawn before maturity of the certificate. P contends that the penalties are income from discharge of indebtedness within the meaning of sec. 108, I.R.C. 1954, and may be deferred in accord with Sec. 1017, I.R.C. 1954. Respondent agrees that the penalties are income to P, but…
1Opinion of the Court
Gerber, Judge:
Respondent determined a deficiency of $5,000 in petitioners’ taxable year ended June 30,1980. Due to an agreement of the parties,1 the sole issue for our consideration is whether income received by financial institutions as penalties for premature withdrawal is to be treated as income from discharge of indebtedness within the meaning of section 108.2 This is an issue of first impression.
FINDINGS OF FACT
All of the facts have been stipulated and are found accordingly. The stipulation of facts and attached exhibits are incorporated by this reference. The factual pattern in this…
2Cases cited25 opinions
- Eisner v. MacOmberSupreme Court of the United States · 1920
- United States v. Kirby Lumber CoSupreme Court of the United States · 1931
- Commissioner v. JacobsonSupreme Court of the United States · 1949
- Helvering v. American Dental Co.Supreme Court of the United States · 1943
- Bowers v. Kerbaugh-Empire Co.Supreme Court of the United States · 1926
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3Cited by19 opinions
- David & Louise Zarin v. Commissioner of Internal Revenue. Appeal of David Zarin and Louise ZarinCourt of Appeals for the Third Circuit · 1990
- Zarin v. CommissionerUnited States Tax Court · 1989
- Michaels v. CommissionerUnited States Tax Court · 1986
- Centennial Savings Bank FSB v. United StatesDistrict Court, N.D. Texas · 1988
- Cottage Sav. Asso. v. CommissionerUnited States Tax Court · 1988
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