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Taxation - Income Tax - Accurabilty Of Dealer Reserves Withheld By Finance Company, A. Duncan Whitaker S.Ed.
Taxation - Income Tax - Accurabilty Of Dealer Reserves Withheld By Finance Company, A. Duncan Whitaker S.Ed.
Michigan Law Review
Petitioner, a dealer in new and used trailers, had agreements with several finance companies whereby they agreed to buy promissory notes he received on installment sales. The agreements permitted the finance company to withhold a portion of the unpaid balance on each note and credit such amount to the petitioner's "dealer reserve" account. The petitioner was liable for all notes in default and the finance company could charge the reserve with any unpaid balance. The reserve could also be charged with any debts of the petitioner to the company. Periodically, the dealer was to receive portions of the reserve in …
Income Tax - Non-Business Bad Debt Deduction - Deduction For Partially Secured Bad Debt Deferable Until Liquidation Of Collateral Regardless Of Tax Avoidance Motive, Robert H. Elliott Jr.
Income Tax - Non-Business Bad Debt Deduction - Deduction For Partially Secured Bad Debt Deferable Until Liquidation Of Collateral Regardless Of Tax Avoidance Motive, Robert H. Elliott Jr.
Michigan Law Review
In 1944 the taxpayer liquidated security held for a non-business debt and deducted the balance of the debt as worthless. The creditor had been insolvent for some time. The commissioner disallowed the deduction on the grounds that the taxpayer had held the security after the debt was worthless in order to obtain a larger tax benefit from the deduction. The district court upheld the Commissioner. On appeal, held, reversed. A partially secured debt is not worthless as long as security is available for its satisfaction. The taxpayer's intent is not a factor in determining worthlessness. Loewi v. Ryan, …
Taxation - Federal Income Tax Deductibility Of Interest On Debentures Issues As A Dividend, Jules M. Perlberg
Taxation - Federal Income Tax Deductibility Of Interest On Debentures Issues As A Dividend, Jules M. Perlberg
Michigan Law Review
Taxpayer, a wholly-owned subsidiary corporation, had filed consolidated returns with its parent prior to 1934. When Congress abolished consolidated returns in that year, the subsidiary issued 6% debentures as a dividend to the parent company and subsequently deducted the interest paid on these bonds. The Commissioner claimed the interest payments were really dividends and were not deductible. The Tax Court upheld the Commissioner pointing out the tax-saving motive, absence of new investment, and parent-subsidiary relationship as factors indicating that no genuine debtor-creditor relationship existed. On appeal, held, reversed. The debentures involved were conventional in form and created a valid …