107 T.C. No. 4
UNITED STATES TAX COURT
CHARLES H. DAVISON AND LESSIE B. DAVISON, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 15887-94. Filed August 26, 1996.
W, a cash basis partnership, entered into an
agreement in 1980 to borrow up to $29 million from J.
J made an initial disbursement of $19,645,000.
Pursuant to the loan agreement, J applied $227,647.22
of the initial disbursement as a credit for interest W
owed to J on a previous loan. Pursuant to a subsequent
modification of the 1980 loan agreement, J agreed to
advance $1,587,310.46 to W to enable W to satisfy its
current interest obligation to J. J made a wire
transfer of $1,587,310.46 to W's bank account on Dec.
30, 1980. On Dec. 31, 1980, W made a wire transfer to
J to satisfy W's current interest obligation. The net
effect of the Dec. 30-31 transaction was to increase
the principal amount of W's loan from J by
$1,587,310.46. W claimed interest deductions of
$227,647.22 and $1,587,310.46 and reported an ordinary
loss on its partnership return for 1980.
Page: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011