Capri, Inc. v. Commissioner
United States Tax Court
Petitioner, which, among other business activities, owned and operated a motel, purchased 56 percent of the stock of Hotel Florence Co. in a single transaction. Florence owned and operated a hotel which sustained operating losses. Florence immediately sold the hotel building to one of petitioner's subsidiary corporations at a loss and leased back the property. Two months following the acquisition, petitioner began attempts to acquire the remaining shares of Florence.
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Petitioner, which, among other business activities, owned and operated a motel, purchased 56 percent of the stock of Hotel Florence Co. in a single transaction. Florence owned and operated a hotel which sustained operating losses. Florence immediately sold the hotel building to one of petitioner's subsidiary corporations at a loss and leased back the property. Two months following the acquisition, petitioner began attempts to acquire the remaining shares of Florence. Almost 2 years transpired from the original acquisition before petitioner owned 80 percent of the outstanding stock of…
1Opinion of the Court
OPINION
Issue 1. Section 269(a)
The Commissioner disallowed petitioner’s deduction for net operating losses sustained by its subsidiary, Hotel Florence, on the ground that petitioner acquired control of Hotel Florence for the purpose of avoiding tax by securing the benefit of the net operating loss deductions to which it would not otherwise be entitled. Section 269(a)3 defines the control which brings about
disallowance of the deduction as 50 percent.
The issue is factual and our inquiry must be focused upon all the circumstances surrounding acquisition of control. Sec. 1.269-3(a), Income Tax…
2Cases cited11 opinions
- Jack E. Golsen and Sylvia H. Golsen v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1971
- Libson Shops, Inc., v. Koehler, District Director of Internal RevenueSupreme Court of the United States · 1957
- American Pipe & Steel Corporation v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1957
- Bush Hog Mfg. Co. v. CommissionerUnited States Tax Court · 1964
- Commodores Point Terminal Corp. v. CommissionerUnited States Tax Court · 1948
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