Murphy v. Commissioner
United States Tax Court
Ps owned a four-year, 7 1/2-percent savings certificate in the amount of $ 30,000. To take advantage of rising interest rates, Ps borrowed $ 27,000 (the share loan) against such certificate and invested the amount borrowed, plus other funds, in a 6-month certificate which was continually renewed. The interest rate earned on the certificates was greater than the interest rate (8 1/2 percent) on the share loan.
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Ps owned a four-year, 7 1/2-percent savings certificate in the amount of $ 30,000. To take advantage of rising interest rates, Ps borrowed $ 27,000 (the share loan) against such certificate and invested the amount borrowed, plus other funds, in a 6-month certificate which was continually renewed. The interest rate earned on the certificates was greater than the interest rate (8 1/2 percent) on the share loan. Held, Ps may not net the interest expense incurred on the share loan against the interest income received from the certificates.
1Opinion of the Court
JACOBS, Judge:
Respondent determined a deficiency in the amount of $1,077 in petitioners’ 1982 Federal income taxes.
The sole remaining issue1 for determination concerns the reporting of interest paid on a loan, the proceeds of which were invested in a high-rate money market certificate which was continually renewed from 1980 through 1982. Petitioners contend that they may reduce the amount of interest income received from the certificates by the amount of interest expense incurred during the year (i.e., they may net the interest expense against the interest income and report only the…
2Cases cited4 opinions
- Commissioner v. SunnenSupreme Court of the United States · 1948
- Meade A. Carpenter, Jr. v. United StatesCourt of Appeals for the Fifth Circuit · 1974
- Carter v. CommissionerUnited States Tax Court · 1969
- Ideal Basic Industries, Inc. v. CommissionerUnited States Tax Court · 1984
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- Dresser Industries, Inc. v. CommissionerUnited States Tax Court · 1989
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