Intergraph Corporation and Subsidiaries - Page 1

                                           106 T.C. No. 16                                                

                                      UNITED STATES TAX COURT                                             

                   INTERGRAPH CORPORATION AND SUBSIDIARIES, Petitioner v.                                 
                         COMMISSIONER OF INTERNAL REVENUE, Respondent                                     

                  Docket No. 21286-93.              Filed May 8, 1996.                                    

                        Held:  Among other things, petitioner, in the year                                
                  of payment, is not entitled to a claimed sec. 166,                                      
                  I.R.C., bad debt deduction with respect to its payment                                  
                  as guarantor of a Japanese-yen-denominated loan made to                                 
                  a Japanese subsidiary corporation.  Where a guarantor                                   
                  has a right of subrogation against, or a right of                                       
                  reimbursement from, the primary obligor (regardless of                                  
                  whether that right is expressly stated in the guaranty                                  
                  agreement), the provisions of sec. 1.166-9(e)(2),                                       
                  Income Tax Regs., apply, and the guarantor is not                                       
                  entitled to a bad debt deduction until the right of                                     
                  subrogation, or the right of reimbursement, is shown to                                 
                  be worthless.                                                                           

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