Capital One Fin. Corp. v. Comm'r
United States Tax Court
P's subsidiaries, COB and FSB, issued Visa and MasterCard credit cards. Among the various revenues received from the credit card business, COB and FSB earned interchange. Interchange is income earned by an issuer of Visa and MasterCard credit cards which accrues to the issuer each time a cardholder uses a credit card for a purchase. It is almost always calculated as a percentage of the total purchase plus, in some instances, a small fixed amount.
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P's subsidiaries, COB and FSB, issued Visa and MasterCard credit cards. Among the various revenues received from the credit card business, COB and FSB earned interchange. Interchange is income earned by an issuer of Visa and MasterCard credit cards which accrues to the issuer each time a cardholder uses a credit card for a purchase. It is almost always calculated as a percentage of the total purchase plus, in some instances, a small fixed amount. When a cardholder used a credit card to purchase an item from a merchant, the cardholder agreed to pay COB or FSB the full purchase price of the…
1Opinion of the Court
Haines, Judge:
Respondent determined deficiencies in, and penalties with respect to, petitioners’ Federal income taxes as follows:1
Penalty Year Deficiency sec. 6662(a)
1995 $1,459,146 N/A
1996 7,162,060 N/A
1997 37,656,474 $5,487,734
1998 72,995,902 5,220,381
1999 175,286,436 13,194,525
Capital One Financial Corp., through its principal subsidiaries Capital One Bank (COB) and Capital One, F.S.B. (fsb) (collectively Capital One),2 is among the world’s largest issuers of Visa and MasterCard credit cards. Its headquarters is in Virginia. After concessions,3 three issues remain for our decision, all of…
2Cases cited26 opinions
- United States v. AndersonSupreme Court of the United States · 1926
- Thor Power Tool Co. v. CommissionerSupreme Court of the United States · 1979
- Commissioner v. HansenSupreme Court of the United States · 1959
- United States v. General Dynamics Corp.Supreme Court of the United States · 1987
- United States v. Midland-Ross Corp.Supreme Court of the United States · 1965
21 more not listed; retrieve them via the Exa API.
3Cited by12 opinions
- Capital One Financial Corp. v. CommissionerCourt of Appeals for the Fourth Circuit · 2011
- John Hancock Life Ins. Co. (U.S.A.) v. Comm'rUnited States Tax Court · 2013
- Winter v. Comm'rUnited States Tax Court · 2010
- Capital One Fin. Corp. v. Comm'rUnited States Tax Court · 2009
- Capital One Financial Corporation and Subsidiaries v. CommissionerUnited States Tax Court · 2009
7 more not listed; retrieve them via the Exa API.