Duncan Industries, Inc., etc. v. Commissioner
United States Tax Court
Petitioner borrowed $ 100,000 from Dycap, Inc., a small business investment corporation. Under the loan agreement, petitioner was to pay a variable rate of interest pegged to the prime interest rate being charged by a New York bank, $ 3,000 in points, and agreed to sell Dycap a 20-percent equity interest in petitioner for $ 500. The 20-percent equity interest involved 24,050 shares of petitioner's $ 1 par value stock for which Dycap paid about $ 0.02 per share.
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Petitioner borrowed $ 100,000 from Dycap, Inc., a small business investment corporation. Under the loan agreement, petitioner was to pay a variable rate of interest pegged to the prime interest rate being charged by a New York bank, $ 3,000 in points, and agreed to sell Dycap a 20-percent equity interest in petitioner for $ 500. The 20-percent equity interest involved 24,050 shares of petitioner's $ 1 par value stock for which Dycap paid about $ 0.02 per share. At about the time the agreement was executed, the book value of petitioner's stock was in excess of its $ 1 par value, and petitioner…
1Opinion of the Court
Drennen, Judge:
Respondent has determined the following deficiencies in petitioner’s corporate income tax:
FYE Mar. 31— Deficiency
1973 . $1,858
1974 . 7,287
The following issues1 are presented for our resolution:(1) Whether petitioner sold discounted stock in connection with a certain loan agreement;(2) If the stock was in fact discounted, does section 1032,1.R.C. 1954,2 bar a deduction under section 162;(3) Whether petitioner must show its compliance with the terms of section 83(h) in order to claim a deduction in connection with this transaction.
FINDINGS OF FACT
Some of the facts have been…
2Cases cited39 opinions
- Welch v. HelveringSupreme Court of the United States · 1933
- United States v. CartwrightSupreme Court of the United States · 1973
- Palmer v. CommissionerSupreme Court of the United States · 1937
- Marie H. Hamm v. Commissioner of Internal Revenue, William Hamm, Jr. v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1963
- Palmer v. CommissionerUnited States Tax Court · 1974
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3Cited by59 opinions
- The Sommers Drug Stores Co. Employee Profit Sharing Trust, Cross-Appellant v. Corrigan Enterprises, Inc. And Walter N. Corrigan, Cross-AppelleesCourt of Appeals for the Fifth Circuit · 1986
- Estate of Andrews v. CommissionerUnited States Tax Court · 1982
- Whitehouse Hotel Ltd. Partnership v. CommissionerCourt of Appeals for the Fifth Circuit · 2010
- Ward v. CommissionerUnited States Tax Court · 1986
- Gary L. Eyler v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1996
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