Skaggs Cos. v. Commissioner
United States Tax Court
Petitioner devised a plan to compel the conversion of its outstanding preferred stock to common stock. In order to insure that petitioner would not be responsible for expending large sums in redemption of its preferred stock during the time of conversion, petitioner entered into an agreement with a group of investment banking firms.
Read the full summary
Petitioner devised a plan to compel the conversion of its outstanding preferred stock to common stock. In order to insure that petitioner would not be responsible for expending large sums in redemption of its preferred stock during the time of conversion, petitioner entered into an agreement with a group of investment banking firms. Petitioner, under the terms of the agreement, paid the investment banking group a fee of $ 35,302. Held, the amount paid to insure the risk-free conversion of preferred stock to common stock is a capital expenditure and not an ordinary and necessary business…
1Opinion of the Court
Fat, Judge:
Respondent determined a deficiency in the income tax liability of petitioner for the taxable year ended January 2, 1969, in the amount of $18,640. The issues presented are (1) whether amounts paid to insure the conversion of preferred stock into common stock are nondeductible capital expenditures, or business expenses currently deductible under section 162,1 and (2) if such payments are capital expenditures, are they amortizable.
FINDINGS OF FACT
Some of the facts have been stipulated; they are so found and incorporated herein by this reference.
Petitioner Skaggs Companies, Inc.…
2Cases cited19 opinions
- Helvering v. Southwest Consolidated Corp.Supreme Court of the United States · 1942
- Warren v. KingSupreme Court of the United States · 1883
- United States v. Transamerica Corporation, Transamerica Corporation v. United StatesCourt of Appeals for the Ninth Circuit · 1968
- Skenandoa Rayon Corp. v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1941
- Mills Estate, Inc. v. Commissioner of Internal Revenue. Commissioner of Internal Revenue v. Mills Estate, IncCourt of Appeals for the Second Circuit · 1953
14 more not listed; retrieve them via the Exa API.
3Cited by9 opinions
- Fort Howard Corp. v. CommissionerUnited States Tax Court · 1994
- FMR CORP. v. COMMISSIONERUnited States Tax Court · 1998
- Bilar Tool & Die Corp. v. CommissionerUnited States Tax Court · 1974
- Bilar Tool & Die Corp. v. CommissionerUnited States Tax Court · 1974
- FMR CORP. v. COMMISSIONERUnited States Tax Court · 1998
4 more not listed; retrieve them via the Exa API.