Terbell v. Commissioner
United States Board of Tax Appeals
Upon a short sale of stock the amount paid to the lender by the vendor, equal to dividends on the borrowed stock, is not deductible by the vendor either as interest or an ordinary and necessary business expense, but is to be added to cost of the stock purchased to cover the short sale.
1Opinion of the Court
OPINION.
ARUndell :
The respondent has determined a deficiency in income tax for the year 1929 in the amount of $5,435.98. The deficiency arises primarily by reason of the disallowance of a deduction of $22,500 which petitioners assert should be allowed either as “ interest paid ” or as an “ ordinary and necessary expense of carrying on a trade or business.” The facts have been stipulated-and the stipulation is incorporated herein by reference.
It appears that on or about October 4,1928, Joseph B. Terbell, now deceased, sold short on the market 9,000 shares of Bucyrus Erie Co. convertible…
2Cited by13 opinions
- Du Pont v. DeputyDistrict Court, D. Delaware · 1938
- Main Line Distributors, Inc. v. CommissionerUnited States Tax Court · 1962
- Dart v. CommissionerUnited States Board of Tax Appeals · 1933
- Commissioner v. Levis' EstateCourt of Appeals for the Second Circuit · 1942
- Commissioner of Internal Revenue v. ParkCourt of Appeals for the Third Circuit · 1940
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