Woodward v. Commissioner
United States Tax Court
Petitioners were stockholders of an Iowa corporation engaged in publishing a newspaper and operating a commercial printing plant and a radio station in Dubuque. The existence of the corporation was due to expire in 1961. In 1960 the majority stockholders voted to extend the corporate existence perpetually. One minority stockholder dissented.
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Petitioners were stockholders of an Iowa corporation engaged in publishing a newspaper and operating a commercial printing plant and a radio station in Dubuque. The existence of the corporation was due to expire in 1961. In 1960 the majority stockholders voted to extend the corporate existence perpetually. One minority stockholder dissented. Under sec. 491.25, Iowa Code Ann., the stockholders voting for renewal were required to purchase at its real value the stock voted against renewal. The parties could not agree upon the real value of the minority stock. Petitioners filed a court action in…
1DissentBruce, J.
In my opinion the majority has erred in at least three important respects in determining that the litigation expenses in question were nondeductible capital expenditures.
First, the majority, although the only issue presented in the State court litigation out of which the expenses in question arose was the “real value” of the stock owned by Margaret M. Quigley and title to such stock was not at issue or in dispute, has failed to give effect to the primary purpose test which this and many other courts have recognized as controlling in the determination of the character of litigation expenses.…
2Cases cited29 opinions
- Kornhauser v. United StatesSupreme Court of the United States · 1928
- Helvering v. WinmillSupreme Court of the United States · 1938
- Harrison E. Spangler and Myrtle B. Spangler v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1963
- Heller v. CommissionerUnited States Tax Court · 1943
- Rassenfoss v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1946
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