Master Lock Co. v. Department of Revenue

This court has previously considered the deductibility of interest paid by a corporation and incurred by financing of the purchase of its own stock. The cases demonstrate that, if the purchase amounts to no more than a readjustment of internal affairs, i.e., a realignment of the interests of the individual stockholders, the interest on the debt created by the purchase is not paid in the operation of the business from which the corporate income is derived and, therefore, the interest is not deductible. Basic Products Corp. v. Department of Taxation (1963), 19 Wis. 2d 183, 186, 120 N. W. 2d…