Eastern Service Corp. v. Commissioner
United States Tax Court
P, a mortgage banker, sold mortgages to the Federal National Mortgage Association (FNMA) which it then serviced. Sec. 303(c) of the FNMA Charter Act requires a "seller-servicer" of mortgages, as a part of the proceeds received on the sale of its mortgage to FNMA, to purchase FNMA stock and to retain the stock for an average period of 15 years.
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P, a mortgage banker, sold mortgages to the Federal National Mortgage Association (FNMA) which it then serviced. Sec. 303(c) of the FNMA Charter Act requires a "seller-servicer" of mortgages, as a part of the proceeds received on the sale of its mortgage to FNMA, to purchase FNMA stock and to retain the stock for an average period of 15 years. Sec. 162(d), I.R.C. 1954, provides a deduction for stock issued pursuant to sec. 303(c) to the extent the "fair market value" of the stock on the issue date is less than the amount paid for the stock. Held, in determining "fair market value" pursuant to…
1Opinion of the Court
Wilbur, Judge:
Respondent determined a deficiency of $281,638.54 in petitioner’s income tax for the taxable year 1969. Some minor adjustments have been conceded by petitioner. The remaining issue1 for our decision is whether petitioner is entitled to all or part of a deduction of $498,512.44 under section 162(d)2 in connection with the acquisition of certain shares of common stock of the Federal National Mortgage Association. If we find that petitioner is entitled to a deduction under section 162(d), we must then ascertain the fair market value of the stock on the date it was acquired in order…
2Cases cited20 opinions
- Commissioner v. TowerSupreme Court of the United States · 1946
- Corn Products Refining Co. v. CommissionerSupreme Court of the United States · 1956
- Burton-Sutton Oil Co. v. CommissionerSupreme Court of the United States · 1946
- Marie H. Hamm v. Commissioner of Internal Revenue, William Hamm, Jr. v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1963
- Estate of Reynolds v. CommissionerUnited States Tax Court · 1970
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3Cited by2 opinions
- Eastern Service Corporation v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1981
- Eastern Service Corp. v. CommissionerUnited States Tax Court · 1980