Scott C. and Sherry L. Russon - Page 1

                                   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                      

Page:   1  2  3  4  5  6  7  8  9  10  11  12  13  Next

Last modified: May 25, 2011