Brief Fact Summary. Petitioners obtained a home loan a portion of which was used to pay points. Petitioners attempted to deduct this full amount in the first tax year of the loan.
Synopsis of Rule of Law. Interest paid or accrued on debt may be deducted within the tax year.
Substantial evidence is more than a mere scintilla, but only so much as would be required to prevent a directed verdict (now judgment as a matter of law) against the Commissioner if this case were being tried to a jury.View Full Point of Law
Issue. Are Petitioners allowed to deduct the full amount paid for points in the same year?
Held. The Tax Court ruled that Petitioners may not take the full deduction because the points were withheld from the loan proceeds.
Discussion. The Tax Court found that since the points were withheld from the mortgage proceeds and not paid for with their own funds disallowed the full deduction in one year. Thus, Petitioners will be required to prorate the deduction over the life of the loan.