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obligation, both as to amount and due date. During this period,
the only significance of the January 31, 1991, due date (rather
than, e.g., August 6, 1991; June 1, 1993; or some other date) and
the $15,030,000 amount (rather than some other figure) rested in
an arbitration award that had been vacated before confirmation.
Consequently, during the period from January 31, 1991, through
May 9, 1994, in which Indeck contends section 163(a) interest
accrued, Indeck’s obligation to Mr. Polsky was neither fixed in
amount nor legally enforceable. As such, it was not indebtedness
giving rise to interest under section 163(a). See Midkiff v.
Commissioner, 96 T.C. 724 (1991); Jordan v. Commissioner, 60 T.C.
at 881-882.
Jordan v. Commissioner, supra, is instructive on this point.
In that case, the taxpayer participated in the sale of stock to
investors who subsequently sued him, alleging securities law
violations in connection with the sale of the stock. In response
to the lawsuits, the taxpayer offered to rescind the sale by
repurchasing the stock for its original purchase price plus
“interest” at the rate of 5 percent per annum from the date of
the original sale until the repurchase. The stock was
repurchased by the taxpayer pursuant to the rescission offer, and
the taxpayer claimed an interest deduction under section 163(a)
for the amounts denominated as 5 percent interest under the terms
of the offer. We sustained the Commissioner’s disallowance of
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