Coleman v. Commissioner

¶1*29 Petitioners purchased an interest in certain computer equipment from C, which had purchased such interest from E, which had purchased an interest in the equipment from A. Petitioners then leased their interest back to C. Held, petitioners did not own a depreciable present interest in the equipment in the years in issue. Held further, petitioners' acquisition constitutes an activity not engaged in for profit, within the meaning of sec. 183, I.R.C. 1954. Held further, interest payments on petitioners' nonrecourse note, which does not constitute genuine indebtedness, are not deductible. Held further, interest payments on a recourse note are deductible.