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The purpose of John Hancock's $1,587,310.46 advance to White
Tail on December 30, 1980, was to provide White Tail with
sufficient funds to satisfy the interest due John Hancock on
January 1, 1981. Petitioners argue that White Tail paid this
interest when it made the wire transfer to John Hancock on
December 31, 1980. Respondent contends that interest has not
been paid but merely postponed, and, consequently, White Tail is
not entitled to a deduction under section 163(a).
On brief, petitioners place particular reliance on prior
decisions of this Court in which the deductibility of interest
paid to a lender, with funds borrowed from the same lender, turns
on whether the borrower exercised "unrestricted control" over the
funds borrowed. Petitioners argue that they are entitled to a
deduction pursuant to section 163(a), because White Tail
possessed unrestricted control of the $1,587,310.46 wired from
John Hancock to White Tail's account at American National on
December 30, 1980.
The concept of "unrestricted control" in cases of this
nature had its origin in Burgess v. Commissioner, 8 T.C. 47
(1947). In Burgess, a cash basis taxpayer originally borrowed
$203,988.90. On December 20, 1941, just prior to the due date of
his interest payment, the taxpayer borrowed an additional $4,000
from the same lender, deposited the lender's check in the
taxpayer's checking account, and commingled the $4,000 with other
funds in the account. On December 26, 1941, the taxpayer drew a
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