- 21 -
case is more like Miller v. Commissioner, 70 T.C. 448 (1978),
where we held that a taxpayer who borrowed money to buy a
controlling interest in the stock of a bank so that he could
become the bank's president held the stock as an investment.
We conclude that petitioners bought and held the New-East
Bank stock as an investment, and that the interest on the loans
was not properly allocable to a trade or business. Thus, the
interest on the $100,000 loan from South Carolina National Bank
is investment interest and is not trade or business interest
under section 163(h)(2)(A).
E. Amount of Interest Paid to First Hanover Bank
Respondent contends that petitioners paid $5,443 in interest
to First Hanover Bank in 1990 because that is the amount shown in
petitioner's ledgers.4 Petitioners contend they paid $8,126
because that is the amount First Hanover Bank reported in the
Form 1098, Mortgage Interest Statement, it sent to petitioners
for 1990. We agree with petitioners because we think the Form
1098 issued by First Hanover Bank is more reliable than
petitioner's ledger sheets.
Respondent points out that petitioner testified that either
he or his corporation paid the interest to First Hanover Bank and
3(...continued)
whether the interest at issue was limited by sec. 163(d) in those
cases.
4 The ledger sheets show that petitioner paid First Hanover
Bank interest of $5,485.19.
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011