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Francisco Federal mortgage interest expense for 1989 and 1990.
See Ashburn v. United States, 740 F.2d 843, 850 (11th Cir. 1984);
Brice v. Commissioner, T.C. Memo. 1990-355, affd. without
published opinion 940 F.2d 667 (9th Cir. 1991); R.C. Lindsey
Plumbing, Inc. v. Commissioner, T.C. Memo. 1988-73; Rouffy v.
Commissioner, T.C. Memo. 1987-5.
At trial, respondent continued to dispute whether interest
on another obligation secured by the Burke property, namely, the
McMahon note, was currently deductible, arguing that the "all
events" test had not been satisfied. See United States v.
General Dynamics Corp., 481 U.S. 239 (1987); Guardian Inv. Corp.
v. Phinney, 253 F.2d 326, 331 (5th Cir. 1958). The McMahon note
provided for 7-percent interest compounded annually starting on
January 1, 1988, with any unpaid principal and interest due and
payable on December 31, 1997. The terms of the McMahon note
required no payment until December 31, 1997, the day before the
termination of the Burke lease. If the Burke property were sold,
however, the note would become immediately due and payable.
Respondent argued that the interest expense on the McMahon note
was not allowable since the payment of the principal was
contingent and dependent on the disposition of the Burke property
and the note was subordinated to another obligation. Id. at 331.
Although we found respondent's logic on this issue "less
than compelling" at trial, that does not mean that her position
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