Preston v. Commissioner
United States Board of Tax Appeals
On October 18, 1934, petitioner borrowed $125,000 from trust company A and delivered that amount to trust company B, as trustee, to be held under a trust indenture for the benefit of a sister-in-law. The trustee was authorized under the trust indenture to lend that entire amount to petitioner on his bond.
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On October 18, 1934, petitioner borrowed $125,000 from trust company A and delivered that amount to trust company B, as trustee, to be held under a trust indenture for the benefit of a sister-in-law. The trustee was authorized under the trust indenture to lend that entire amount to petitioner on his bond. On October 19, 1934, petitioner delivered to the trustee his bond under seal, in which he covenanted to pay $125,000 in 20 years with interest at 4 percent per annum; the trustee delivered $125,000 to petitioner, and petitioner used that amount to satisfy his loan from trust company A. Under…
1Opinion of the Court
*976OPINION.
Harron :
The sole question is whether petitioner is entitled to a deduction for interest paid on indebtedness with respect to the payments totaling $5,000 which were made by him in the taxable year to the United States Trust Co. The deduction in question was not taken by petitioner on his return for the taxable year, but was claimed by him in his petition.
Under section 23 (b) of the Revenue Act of 1936 a deduction is allowed for all interest paid within the taxable year on indebtedness. The term “indebtedness”, as used in section 23 (b), is not defined in the revenue acts. The Board…
2Cases cited4 opinions
- Cochran v. TaylorNew York Court of Appeals · 1937
- Harris v. . ShorallNew York Court of Appeals · 1921
- Alexander v. Equitable Life Assurance SocietyNew York Court of Appeals · 1922
- Helmick v. ProbstNew York Supreme Court · 1939
3Cited by2 opinions
- Preston v. CommissionerUnited States Board of Tax Appeals · 1941
- Preston's Estate v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1951