Follender v. Commissioner
United States Tax Court
P, a limited partner, assumed the primary obligation of the principal, but not the interest, of a portion of a recourse note, bearing nonrecourse interest, given by a partnership for purchase of a motion picture. Held, (1) P was at risk for his percentage of the amount of principal assumed, without reduction to present value of the obligation, and (2) the partnership's basis in the motion picture is not reduced for imputed interest under sec. 483, I.R.C. 1954, as amended.
1Opinion of the Court
OPINION
COHEN, Judge:
Respondent determined a deficiency of $152,613 in petitioners’ 1981 Federal income taxes. After concessions, the issues for decision are as follows:(1) To what extent is petitioner’s amount at risk increased by virtue of assuming the primary obligation of the principal, but not the interest, of a recourse purchase note bearing nonrecourse interest.(2) If we decide the first issue in favor of petitioners, whether nonrecourse interest due on a recourse purchase note and payable solely from gross receipts is “contingent interest” under section 483.1(3) If we decide the first…
2Cases cited15 opinions
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