- 5 - grounds that they were neither business expenses under section 162 nor deductible interest expenses under section 163. OPINION Respondent contends that the interest payments on the promissory note are nondeductible personal expenses. The interest accrued on funds that were characterized in the promissory note as petitioner's "medical school tuition and expenses".3 Therefore, respondent argues that these payments are of a personal nature and do not qualify as either section 162 business expenses or section 163 interest expenses. Petitioner's position is that the interest payments are deductible business expense because settlement of his claim with DHHS allowed petitioner to avoid his medical service obligation thereby enabling him to devote more time to his medical practice. 3The Settlement Agreement and Mutual Release signed on behalf of the Secretary and the petitioner states: 1. Dr. Keane shall pay to the Secretary the principal sum of one hundred twenty-five thousand dollars ($125,000.00), (representing forty-five thousand eight hundred and five dollars ($45,805.00) in original principal (i.e., the monies expended on Dr. Keane's behalf for his medical school tuition and expenses), plus previously accrued interest totaling seventy-nine thousand one hundred ninety-five dollars ($79,195.00) claimed by the Secretary under 42 U.S.C. Section 254o(b)(1)), plus additional interest on the unpaid balance compounded at the rate of seven and twenty-two one-hundreths [sic] percent (7.22%) per annum, in a single lump-sum payment plus quarterly installments as set forth in the Promissory Note which is appended to this Agreement as Attachment 1. [Emphasis added.]Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011