Cleveland Adolph Mayer Realty Corp. v. Commissioner
United States Tax Court
1. During the taxable years the petitioner paid interest upon its debenture bonds which had been issued by it in connection with a reorganization of corporations effected in 1938. Held, that the interest paid is a legal deduction from gross income. 2. Prior to 1940 depreciation on the building owned by the petitioner was taken at the rate of 3 percent per annum, except that no depreciation was claimed or allowed for a period of 3 1/2 years.
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1. During the taxable years the petitioner paid interest upon its debenture bonds which had been issued by it in connection with a reorganization of corporations effected in 1938. Held, that the interest paid is a legal deduction from gross income. 2. Prior to 1940 depreciation on the building owned by the petitioner was taken at the rate of 3 percent per annum, except that no depreciation was claimed or allowed for a period of 3 1/2 years. Respondent has determined, and the petitioner concedes, that depreciation suffered was at a rate of only 2 percent per annum. Respondent insists, however,…
1Opinion of the Court
OPINION.
Smith, Judge:
We consider first the question as to the right of the petitioner to deduct interest paid upon its debentures outstanding during the taxable years. Section 23 of the Internal Revenue Code provides in material part as follows:
SEC. 23. DEDUCTIONS PROM GROSS INCOME.
In computing net income there shall be allowed as deductions:
*******(b) Interest. — All interest paid or accrued within the taxable year on indebtedness, * * *
The question presented is whether the outstanding debentures of the petitioner during the taxable years constitute indebtedness. The respondent submits that…
2Cases cited9 opinions
- Gould v. GouldSupreme Court of the United States · 1917
- Old Colony Railroad v. CommissionerSupreme Court of the United States · 1932
- John Kelley Co. v. CommissionerSupreme Court of the United States · 1946
- United States v. MerriamSupreme Court of the United States · 1923
- United States v. UpdikeSupreme Court of the United States · 1930
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- Earle, Collector of Internal Revenue v. W. J. Jones & Son, Inc. United States v. W. J. Jones & Son, IncCourt of Appeals for the Ninth Circuit · 1952
- Mullin Bldg. Corp. v. CommissionerUnited States Tax Court · 1947
- Estate of Miller v. CommissionerUnited States Tax Court · 1955
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