107 T.C. No. 15
UNITED STATES TAX COURT
SCOTT C. AND SHERRY L. RUSSON, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 23686-94. Filed November 6, 1996.
P, a funeral director, is a full-time employee of
Russon Brothers Mortuary, a C corporation, all the
stock of which was owned by his father and two uncles.
In 1985, P, his brother, and two cousins (all funeral
director employees of Russon Brothers) agreed to
purchase all the stock from their fathers so that the
sons could conduct the mortuary business and earn a
living continuing the business founded and developed by
their fathers. P incurred indebtedness in order to
purchase his share of the stock. At issue is whether
interest paid on that indebtedness is deductible as
business interest or whether deductibility is subject
to the investment interest limitations of sec. 163(d),
I.R.C., as modified by the Revenue Act of 1986, Pub. L.
99-514, 100 Stat. 2085.
Pursuant to sec. 163(d)(1), I.R.C., the amount
allowable as a deduction for "investment interest" may
not exceed the taxpayer's "investment income",
sometimes known as portfolio income. "Investment
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