Newhouse v. Commissioner
United States Tax Court
Held: The proceeds from a forced sale of collateral by a creditor made in circumstances of the debtor's insolvency were properly applied by the creditor to unpaid principal on the indebtedness. Accordingly, where such proceeds were insufficient in amount to cover even the principal due on the secured obligation, the debtor was not entitled to any deduction for interest paid.
1Opinion of the Court
OPINION
Kaum:, Judge:
Petitioner has taken the position that First Western was required by law to apply the proceeds from the foreclosure sale of September 11,1968 ($227,477.97), first to accrued interest (approximately $143,570.90, by the bank’s computations) and not to treat those proceeds, as it did, entirely as a recovery of overdue principal. The Commissioner maintains that the bank’s actions were proper, and we think that his position must prevail.
To be sure, it is well established that a voluntary 'partial payment on indebtedness, made in ordinary course without any designation by the…
2Cases cited15 opinions
- Commissioner v. Estate of BoschSupreme Court of the United States · 1967
- Helvering v. Midland Mutual Life InsuranceSupreme Court of the United States · 1937
- Story v. LivingstonSupreme Court of the United States · 1839
- Rushing v. CommissionerUnited States Tax Court · 1972
- Sherman v. CommissionerUnited States Tax Court · 1952
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3Cited by5 opinions
- Aizawa v. CommissionerUnited States Tax Court · 1992
- Aizawa v. CommissionerUnited States Tax Court · 1992
- Estate of Ratliff v. CommissionerUnited States Tax Court · 1995
- Lackey v. CommissionerUnited States Tax Court · 1977
- Newhouse v. CommissionerUnited States Tax Court · 1973