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Petitioner claims overpayments of $57,775,538 for 1987,
$28,434,990 for 1988, $32,577,346 for 1989, and $19,504,333 for
1990.
In this Opinion, we decide whether certain nonrefundable
commitment fees that mortgage originators paid to petitioner to
enter into Conventional Multifamily Prior Approval Purchase
Contracts (prior approval purchase contracts) are to be
recognized when those fees are paid or should be treated as
premium for “put” options, which would defer recognition until
after delivery or nondelivery of the underlying mortgages.1 This
issue is one of several involved in these cases.2
Background
The parties submitted this issue fully stipulated pursuant
to Rule 122.3 The stipulations of fact and the attached exhibits
are incorporated herein by this reference. At the time it filed
the petitions, petitioner maintained its principal office in
1 The adjustments proposed in the notices of deficiency for
1985 through 1990 pertaining to the commitment fee issue included
a small amount of commitment fees related to single-family
optional delivery mixed in with the prior approval program. The
parties have since resolved the commitment fee issue as to the
single-family program.
2 See Fed. Home Loan Mortgage Corp. v. Commissioner, 121
T.C. 129; 121 T.C. 254; 121 T.C. 279 (2003); T.C. Memo. 2003-298.
3 All Rule references are to the Tax Court Rules of Practice
and Procedure, and all section references are to the Internal
Revenue Code in effect for the taxable years in issue.
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