Coleman v. Commissioner
United States Tax Court
Petitioners purchased an interest in certain computer equipment from C, which had purchased such interest from E, which had purchased an interest in the equipment from A. Petitioners then leased their interest back to C. Held, petitioners did not have a depreciable interest in the equipment during the years in issue. Held, further, interest payments on petitioners' nonrecourse note, which does not constitute genuine indebtedness, are not deductible.
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Petitioners purchased an interest in certain computer equipment from C, which had purchased such interest from E, which had purchased an interest in the equipment from A. Petitioners then leased their interest back to C. Held, petitioners did not have a depreciable interest in the equipment during the years in issue. Held, further, interest payments on petitioners' nonrecourse note, which does not constitute genuine indebtedness, are not deductible. Held, further, interest payments on a recourse note are deductible.
1Opinion of the Court
TANNENWALD, Judge:
Respondent determined deficiencies in petitioners’ Federal income taxes for taxable years 1979 and 1980 of $2,189 and $2,442, respectively, relating to petitioner Nancy Coleman’s 1-percent interest in a computer leasing transaction. In his amended answer, respondent alleged additional deficiencies for taxable years 1979 and 1980 of $31,840 and $64,700, respectively, relating to petitioner Ronald Coleman’s interest in the same transaction. The issues for decision are whether petitioners’ deductions for depreciation and interest expenses were properly disallowed.
FINDINGS OF…
2Cases cited48 opinions
- Deputy, Administratrix v. Du PontSupreme Court of the United States · 1940
- Knetsch v. United StatesSupreme Court of the United States · 1960
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- Brannen v. CommissionerUnited States Tax Court · 1982
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