overruling John C. Hermann, 27 B.T.A. 409
How later courts described this case
- overruling John C. Hermann, 27 B.T.A. 409
- overruling John , 27 B.T.A. 409
Written by the judges who cited it.
The opinion
McMahoN,
dissenting on the second point: Bearing in mind that taxation is eminently practical, and looking through form to substance, which is vital and controlling, as we must do, in the final analysis we have presented in this proceeding a simple situation substantially and essentially as follows: Petitioner gave to a bank his promise in writing to later pay it money with interest thereon— a chose in action, property, an asset in the possession of the bank— and also collateral — property, an asset — securing the fulfillment of his promise, for all of which he received from the bank money or its equivalent. Such money so received thereupon became his money. Thus having the money, he used a portion of it, $8,243, to pay in cash or its equivalent interest which he owed the bank on a previous uncollateralized similar written promise to pay to the same bank a smaller amount with interest.
For all practical purposes, and in effect, the result is the same as if he had thus gotten the $8,243 in cash from a second bank and immediately carried it over and delivered it to the first bank in payment of such interest, or, immediately thus used it to pay interest which he owed to a third bank.
Obviously, if he had pursued either of the latter two courses the deduction of the interest would be allowable; and the same principle requires that the deduction for the interest in issue in this proceeding be allowed.
It may be added that in the instant proceeding the interest in question was, and in each of the other two assumed analagous situations would be, simultaneously and correspondingly income to the bank.
If there is anything in any of the precedents contrary to or in conflict with these conclusions, they, to that extent, should not be adhered to.