- 10 - and the McMahon Note, therefore, would not become immediately due and payable. On March 4, 1988, petitioner refinanced the Burke Property. Petitioner borrowed $475,000 from San Francisco Federal Savings (San Francisco Loan) and paid off the remaining $323,731.51 balance of the TIAA Loan and the Owen's Financial Loan, the remaining balance of which was $86,181.50. Respondent has conceded that petitioner was entitled to deduct the interest on the San Francisco Loan in 1989 and 1990. But the 1988 interest, which substantially contributed to petitioner's net operating loss for that year, has not been conceded to be deductible. The San Francisco Loan required petitioner to pay $3,994.06 interest and principal monthly, beginning on April 1, 1988, and continuing every month thereafter for 12 months. Afterward, the note established a new monthly payment for the next 12 months depending upon market interest rates. The total of the payments required in 1988 was $35,946.54. The interest rate of the loan was fixed at 9.5 percent for the first 6 months of the loan. After that, the interest rate varied from month-to-month in accordance with current market interest rates. As of the end of 1988, the interest rate on the San Francisco Loan had increased to 11.307 percent. As previously stated, petitioner controlled several subsidiaries over the years. These were Controlled CastingPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
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