Pepi, Inc. v. Commissioner
United States Tax Court
The Industrial Expansion Committee of a group of American Philips corporations decided in March of 1957 to have one of the corporations in the group merge with A. Hollander & Son, Inc. in such a way that the Philips companies would acquire control of Hollander. This merger was effected in July 1957. Hollander had a two-million-dollar-plus net operating loss carryover.
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The Industrial Expansion Committee of a group of American Philips corporations decided in March of 1957 to have one of the corporations in the group merge with A. Hollander & Son, Inc. in such a way that the Philips companies would acquire control of Hollander. This merger was effected in July 1957. Hollander had a two-million-dollar-plus net operating loss carryover. The loss resulted from a fur business which it had disposed of in the latter half of 1956. Respondent determined the principal purpose for the acquisition was to secure the benefit of a deduction for the loss carryover. In…
1Opinion of the Court
OPINION
The issue is whether petitioner is entitled to net operating loss deductions sustained in prior years under its former name. The resolution of that issue depends upon whether the principal purpose of Industries in effecting the 1957 merger of Old Philips and Hollander was to secure the tax benefit of Hollander’s carryover losses. Bespond-ent determined that the losses were not deductible pursuant to section 269 because the “principal purpose” for the acquisition of Hollander was to secure a tax benefit not otherwise enjoyable.
Section 269 as applicable to the years in issue provides…
2Cases cited8 opinions
- American Pipe & Steel Corporation v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1957
- Beckett v. CommissionerUnited States Tax Court · 1963
- Fawn Fashions, Inc. v. CommissionerUnited States Tax Court · 1963
- Hawaiian Trust Co. v. United StatesCourt of Appeals for the Ninth Circuit · 1961
- Swiss Colony, Inc. v. CommissionerUnited States Tax Court · 1969
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3Cited by5 opinions
- D'Arcy-MacManus & Masius, Inc. v. CommissionerUnited States Tax Court · 1975
- Pepi, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1971
- In Re Federated Department Stores, Inc.United States Bankruptcy Court, S.D. Ohio · 1992
- D'Arcy-MacManus & Masius, Inc. v. CommissionerUnited States Tax Court · 1975
- Pepi, Inc. v. CommissionerUnited States Tax Court · 1969