- 23 -
period, petitioner may move to reopen the record for the sole
purpose of offering additional evidence regarding the San
Francisco Loan interest deduction for this period.
As for the Investor Group Loan, the ending balance as of
October 29, 1985, is not in evidence. But because the deed of
trust for the Investor Group Loan overlaps the deed of trust for
the Owens Loan by only a month, we believe that the Owens Loan
effectively refinanced the Investor Group Loan. We, therefore,
find that the principal balance of the Investor Group Loan
increased from $75,000 to $85,000 between June 10, 1982 and
October 29, 1985.
The interest rate for the Investor Group Loan and for the
Owens Loan is also unknown. Nevertheless, we believe petitioner
accrued some interest on these notes, and that a reasonable rate
of interest for the period in question would be 5-1/2 percent
simple interest per annum. Interest deductions from these notes
will be recalculated on this basis under Rule 155.
The McMahon Note accrued interest in 1989 and 1990. The
McMahon Note requires no payment until December 31, 1997, the day
before the Burke Lease terminates, or until petitioner sells the
Burke Property. Petitioner claims that since it is an accrual
method taxpayer, it is entitled to deduct the interest currently.
Respondent denied petitioner's deduction, asserting that
petitioner's liability was neither fixed nor certain. Respondent
Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 NextLast modified: May 25, 2011