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Bank's common stock remained as one share of common stock of the
resulting national bank, and each share of National Bank of
Harrah's common stock was exchanged for one-seventh of a share of
Midwest Bancshares common stock.
In their returns for 1991, 1992, and 1993, petitioners
claimed total investment interest expenses of $330,581, $221,697,
and $149,034, respectively. Of those total amounts, petitioners
reported in the Forms 4952 (Investment Interest Expense Deduc-
tion), which they included with their returns for 1991, 1992, and
1993, respectively, that (1) $323,088 was "Investment interest
expense paid or accrued in 1991", and $7,493 was "Disallowed
investment interest expense from 1990 Form 4952, line 23";
(2) $47,824 was "Investment interest expense paid or accrued in
1992", and $173,873 was "Disallowed investment interest expense
from 1991 Form 4952, line 5"; and (3) $49,445 was "Investment
interest expense paid or accrued in 1993", and $99,589 was
"Disallowed investment interest expense from 1992 Form 4952, line
5". Included in the $323,088 of investment interest expense
which petitioners claimed in their 1991 Form 4952 they paid or
accrued during 1991 was the 1991 interest payment of $268,027.48
that petitioner made as part of the 1991 settlement to correct
the 1982 plan loan prohibited transaction.
Because of limitations prescribed by section 163(d)(1) on
the deductible amount of investment interest, petitioners de-
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