Tax Court: Forbearance Payments to Shareholders Not Deductible as Interest

The Tax Court found that forbearance payments made to preferred stockholders to forgo redemption elections were not deductible as interest, but some of the payments were deductible as trade or business expenses under Sec. 162 and later payments were subject to capitalization under Sec. 263.

Media Space Inc. v. Commissioner, 135 T.C. No. 21 (2010)