Case Name: Miller Safe Co., Inc., Petitioner, v. Commissioner of Internal Revenue, Respondent
Court: United States Board of Tax Appeals
Jurisdiction: United States
Decision Date: 1928-07-17
Citations: 12 B.T.A. 1388
Docket Number: Docket No. 10788
Parties: Miller Safe Co., Inc., Petitioner, v. Commissioner of Internal Revenue, Respondent.
Judges: 
Reporter: Reports of the United States Board of Tax Appeals
Volume: 12
Pages: 1388–1391

Head Matter:
Miller Safe Co., Inc., Petitioner, v. Commissioner of Internal Revenue, Respondent.
Docket No. 10788.
Promulgated July 17, 1928.
C. J. McGuire, Esq., for the petitioner.
W. F. Wattles, Esq., for the respondent.

Opinion:
OPINION.
Sternhagen :
The question is not, as argued by petitioner, whether the item was interest which accrued for the first time in the period in question when it was put on petitioner's books, but rather, whether it accrued at all as interest. The petitioner, under the stipulated facts, was under no obligation to pay interest during prior years because there was no súch agreement. The stockholder was apparently advancing money without interest for reasons of his own. When the corporation resolved to pay him " interest " it was a gratuitous act. Strictly the amount was not interest.
The statute should not lightly be construed to permit interest, which ordinarily would accrue ratably so as to be deductible proportionately, to be piled up for deduction in a year when taxes become important — especially when the debtor and creditor are so closely related that their interests are largely at one. The respondent was. correct.
Reviewed by the Board.
Judgment will be entered under Bule 60.