- 5 - months and years, the principal balance due on the indebtedness and the proper accrued interest deduction thereon. Petitioner emphasizes the following points: (1) That under the express terms of the Partnership’s promissory note, the monthly payments of $43,725 were to represent "interest" only; (2) that the Partnership’s total stated principal indebtedness on the promissory note of $4,770,000 was to remain outstanding for the initial 17-year term of the promissory note and was to be refinanced at the end of 17 years with a new 20-year promissory note that would then be amortized over the next 20 years with payments of principal and interest; (3) that the enforceability under State law of the terms of the initial 17-year promissory note is not affected by our disregard, solely for Federal income tax purposes, of a portion of the principal amount of the Partnership’s indebtedness; and (4) that to apply to principal the portion of each $43,725 monthly payment that is not accruable as interest (under the economic accrual method of calculating interest) would represent an impermissible disregard of the interest-only feature of the Partnership’s monthly payments during the initial 17-year term of the promissory note and would represent an impermissible rewrite by the Court of the Partnership’s indebtedness to a term of just over 6 years. The following language from petitioner's memorandum in support of the instant motion elaborates further on petitioner’s position --Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011