- 47 -
Similarly, in Dunlap v. Commissioner, supra, we found
indebtedness for purposes of section 163(a) notwithstanding the
fact that the obligation on which the purported interest accrued
remained subject to a condition precedent (namely, Federal
Reserve Board approval of the underlying transaction) during a
substantial portion of the period in which the claimed interest
accrued. The condition precedent was outside the control of the
taxpayer claiming the interest deduction. But in Dunlap, the
purported debtor and creditor had agreed on the amount of the
obligation and the date on which the obligation would become due,
in advance of the commencement of interest. As we explained in
distinguishing Dunlap in a later case: “the amount of the
indebtedness upon which interest accrued in Dunlap * * * was
fixed as of the date that the interest began to accrue.” Midkiff
v. Commissioner, 96 T.C. at 739. In the instant case, the amount
Indeck owed Mr. Polsky for his shares was not fixed until more
than 3 years after the January 31, 1991, date on which Indeck
asserts interest began to accrue.
In relying on Dunlap and emphasizing that it had an
“unconditional obligation” under the Shareholders’ Agreement to
purchase Mr. Polsky’s shares, Indeck may be suggesting that it is
entitled to an interest deduction under the principles of Dunlap
because its obligation to pay $15,030,000 to Mr. Polsky for the
shares was only subject to contingencies outside its control
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