- 45 -
of its position. However, those cases are distinguishable in a
key respect. In both, there was agreement between the purported
debtor and creditor as to the amount of the obligation and its
due date, as of the time the purported interest began to accrue.
Here, the amount of Indeck’s obligation, and its due date, were
disputed during the period that the bulk of the claimed interest
purportedly accrued.
In Halle, the Court of Appeals for the Fourth Circuit,
reversing our opinion in Kingstowne,20 held that an agreement for
the purchase of stock at a specified price and settlement date
created indebtedness on the part of the purchaser such that the
purchaser’s payments to defer settlement beyond the agreed-upon
settlement date constituted interest for purposes of section
163(a) rather than additional purchase price. Indeck likens the
disputed $4,856,922 portion of the settlement payment here to the
payments made by the purchaser in Halle to defer the settlement
date of the stock purchase-–that is, as a payment for the
forbearance of money owed. But a critical distinction exists.
20 Because Halle v. Commissioner, 83 F.3d 649 (4th Cir.
1996), revg. on other grounds Kingstowne v. Commissioner, T.C.
Memo. 1994-630, is fully distinguishable from the facts of this
case and is not inconsistent with our holding herein that Indeck
has not established indebtedness for purposes of sec. 163(a), we
have no occasion to reconsider our holding in Kingstowne that the
purchase agreement at issue in that case created merely an option
to purchase rather than an indebtedness. See Golsen v.
Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985 (10th Cir.
1971).
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