Yates Industries, Inc. v. Commissioner
United States Tax Court
Held: 1. The motive or purpose of a corporation making payments in settlement of litigation between it and a former officer and stockholder does not control whether those payments constitute a deductible expense of the corporation. 2. Where the parties to an agreement settling litigation between them did not allocate any portion of the settlement payment to a noncompete covenant, and other evidence of record shows that the parties intended that the entire amount be for the…
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Held: 1. The motive or purpose of a corporation making payments in settlement of litigation between it and a former officer and stockholder does not control whether those payments constitute a deductible expense of the corporation. 2. Where the parties to an agreement settling litigation between them did not allocate any portion of the settlement payment to a noncompete covenant, and other evidence of record shows that the parties intended that the entire amount be for the purchase of trade secrets, the total payment is considered to be in payment for the purchase of trade secrets. 3. The…
1Opinion of the Court
Scott, Judge:
Respondent determined deficiencies in petitioner’s income taxes for its taxable years 1963,1964, and 1965 as follows:
Taxable year ended Deficiency
Feb. 28, 1963-$31, 761.47
Feb. 29, 1964- 30, 244.44
Feb. 28, 1965_ 24, 639. 65
The issue for decision is whether payments made by petitioner to a former officer and stockholder were pursuant to an agreement of purchase and sale of trade secrets entered into in connection with settlement of litigation or represented deductible expenditures made in connection with the settlement of that litigation; and if the amount were paid to purchase…
2Cases cited13 opinions
- United States v. GilmoreSupreme Court of the United States · 1963
- Woodward v. CommissionerSupreme Court of the United States · 1970
- Commissioner v. DanielsonCourt of Appeals for the Third Circuit · 1967
- Danielson v. CommissionerUnited States Tax Court · 1965
- Raytheon Production Corp. v. Commissioner of Int. Rev.Court of Appeals for the First Circuit · 1944
8 more not listed; retrieve them via the Exa API.
3Cited by29 opinions
- Metzger v. CommissionerUnited States Tax Court · 1987
- Bent v. CommissionerUnited States Tax Court · 1986
- Roemer v. CommissionerUnited States Tax Court · 1982
- Kinney v. CommissionerUnited States Tax Court · 1972
- Redwood Empire Savings & Loan Association v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1980
24 more not listed; retrieve them via the Exa API.