Security State Bank v. Commissioner
United States Tax Court
P is a bank that uses the cash method of accounting. During 1989, P made short-term loans to customers. The principal and interest on the loans were payable at maturity. R determined that P must accrue interest and/or original issue discount on the loans pursuant to sec. 1281(a)(1) and ( 2), I.R.C. HELD: Sec. 1281(a)(2), I.R.C., does not require a bank to accrue interest on short-term loans made in the ordinary course of its business.
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P is a bank that uses the cash method of accounting. During 1989, P made short-term loans to customers. The principal and interest on the loans were payable at maturity. R determined that P must accrue interest and/or original issue discount on the loans pursuant to sec. 1281(a)(1) and ( 2), I.R.C. HELD: Sec. 1281(a)(2), I.R.C., does not require a bank to accrue interest on short-term loans made in the ordinary course of its business. Security Bank Minn. v. Commissioner, 98 T.C. 33 (1992), affd. 994 F.2d 432 (8th Cir. 1993). HELD, FURTHER: Sec. 1281(a)(1), I.R.C., does not require a bank to…
1Opinion of the Court
OPINION
Ruwe, Judge:
Respondent determined a deficiency of $29,972.41 in petitioner’s 1989 Federal corporate income tax. The issue for decision is whether section 1281(a)1 requires petitioner, a cash basis taxpayer, to accrue interest and/or original issue discount earned on short-term loans.
Background
The parties submitted this case fully stipulated. The stipulation of facts and supplemental stipulation of facts are incorporated herein by this reference. Petitioner is a corporation whose principal place of business was in Wellington, Kansas, at the time it filed the petition.
Petitioner is a…
2Cases cited3 opinions
- Hesselink v. CommissionerUnited States Tax Court · 1991
- Security Bank Minnesota v. Commissioner of Internal Revenue ServiceCourt of Appeals for the Eighth Circuit · 1993
- Sec. Bank Minn. v. Comm'rUnited States Tax Court · 1992
3Cited by20 opinions
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- Nihiser v. Comm'rUnited States Tax Court · 2008
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