Lexmont Corp. v. Commissioner
United States Tax Court
1. Held, a trust is not an "individual" within the meaning of section 24 (b) and the deduction of interest accrued by petitioner corporation on sums owing to a trust that owned all the stock of the petitioner is not disallowed by section 24 (c), and is allowed by section 23 (b). 2. In 1946 the petitioner received a refund of part of the New York City real estate taxes paid for the years 1934 through 1945. Held, further, under section 22 (b) (12) this sum is includible in…
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1. Held, a trust is not an "individual" within the meaning of section 24 (b) and the deduction of interest accrued by petitioner corporation on sums owing to a trust that owned all the stock of the petitioner is not disallowed by section 24 (c), and is allowed by section 23 (b). 2. In 1946 the petitioner received a refund of part of the New York City real estate taxes paid for the years 1934 through 1945. Held, further, under section 22 (b) (12) this sum is includible in petitioner's 1946 income and subject to income tax to the extent of the amount of the deductions for the taxes which…
1Opinion of the Court
OPINION.
Arundell, Judge:
The basic question is whether the deductions claimed by the petitioner corporation, an accrual basis taxpayer, for interest accrued during the taxable years but not paid at any time on promissory notes owing to a trust are disallowed by section 24 (c), Internal Revenue Code.1 The trust was created for legitimate testamentary purposes and no question of bona fides is raised by the respondent, nor does the respondent raise any question as to whether the notes represented an equity interest rather than a loan.
Section 24 (c) provides that no deduction shall be allowed…
2Cases cited2 opinions
- Security Flour Mills Co. v. CommissionerSupreme Court of the United States · 1944
- Taylor Instrument Cos. v. CommissionerUnited States Tax Court · 1950
3Cited by9 opinions
- Hillsboro National Bank v. CommissionerSupreme Court of the United States · 1983
- The South Bay Corporation v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1965
- Hanna v. CommissionerUnited States Tax Court · 1961
- Wisconsin Memorial Park Co. v. CommissionerUnited States Tax Court · 1957
- Hanna v. CommissionerUnited States Tax Court · 1961
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