Earl Drown Corp. v. Commissioner
United States Tax Court
Petitioners were the general partners of DNA, which was a wholesale distributor of magazines and paperback books of various publishers. DNA annually would borrow money from DPI and the Drown Trust to help fund December payments to publishers. During the years in issue, DNA purchased tax-exempt bonds from excess funds generated from its business.
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Petitioners were the general partners of DNA, which was a wholesale distributor of magazines and paperback books of various publishers. DNA annually would borrow money from DPI and the Drown Trust to help fund December payments to publishers. During the years in issue, DNA purchased tax-exempt bonds from excess funds generated from its business. At the time of such purchases, DNA reasonably could have foreseen that a loan probably would be necessary to satisfy its future economic needs, which were of an ordinary, recurrent nature. Held, the interest expense deducted by DNA for interest paid…
1Opinion of the Court
STERRETT, Chief Judge:
In these consolidated cases, respondent determined, by notices dated December 31, 1981, deficiencies in petitioners’ Federal income taxes as follows:
Docket No. Petitioner Tax year ended Deficiency
3350-82 Earl Drown Corp. 11/30/77 $3,207
11/30/78 1,160
3351-82 Blanche Drown Corp. 11/30/77 3,257
11/30/78 1,172
3352-82 Jack A. Drown and 12/31/76 25,625
Helene C. Drown 12/31/77 8,000
After concessions, the sole issue before the Court is whether the interest expense deducted by Drown News Agency for interest paid to the Drown Trust and to Drown Periodicals, Inc., was nondeductible…
2Cases cited15 opinions
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