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in which the originator failed to exercise its right to
sell the mortgage. R determined that the nonrefundable
commitment fees should have been reported in the
taxable year that P received the payment.
Held: In substance and form, P’s prior approval
purchase contracts were put options, and P properly
reported the nonrefundable portion of the commitment
fees as option premiums.
Robert A. Rudnick, James F. Warren, Alan J. Swirski,
Richard J. Gagnon, Jr., and B. John Williams, Jr., for
petitioner.
Gary D. Kallevang, for respondent.
OPINION
RUWE, Judge: Respondent determined deficiencies in
petitioner’s Federal income taxes in docket No. 3941-99 as
follows:
Year Deficiency
1985 $36,623,695
1986 40,111,127
Petitioner claims overpayments of $9,604,085 for 1985 and
$12,418,469 for 1986.
Respondent determined deficiencies in petitioner’s Federal
income taxes in docket No. 15626-99 as follows:
Year Deficiency
1987 $26,200,358
1988 13,827,654
1989 6,225,404
1990 23,466,338
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