Bradford v. Commissioner
United States Tax Court
Petitioners, who are broker-dealers, took advantage of "inside" information to purchase stock for themselves, relatives, and a related entity. The SEC brought action for securities fraud under sec. 10(b) of the Securities Exchange Act of 1934. Petitioners settled by disgorging their profits from the investments into a fund to make whole the defrauded sellers.
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Petitioners, who are broker-dealers, took advantage of "inside" information to purchase stock for themselves, relatives, and a related entity. The SEC brought action for securities fraud under sec. 10(b) of the Securities Exchange Act of 1934. Petitioners settled by disgorging their profits from the investments into a fund to make whole the defrauded sellers. Petitioners deducted the amounts paid into the fund, alleging that their primary purpose was to protect their business reputations. Held: The amounts in question were capital expenditures and not deductible business expenses. The…
1Opinion of the Court
Hall, Judge:
Respondent determined the following deficiencies in petitioners’ income taxes:
Docket No. Tumble year Deficiency
5701-76. 1972 $81,005.75
5701-76. 1973 135,628.94
5831-76. 1973 11,320.41
Due to concessions made by petitioners, the issues for decision are:(1) Whether payments by petitioners James C. Bradford, Sr., and James C. Bradford, Jr., in settlement of an SEC action brought under rule 10b-5 alleging insider trading with respect to their personal accounts, were capital expenditures or ordinary and necessary business expenses.(2) Whether petitioners James C. Bradford, Sr., and…
2Cases cited12 opinions
- United States v. GilmoreSupreme Court of the United States · 1963
- Woodward v. CommissionerSupreme Court of the United States · 1970
- Boagni v. CommissionerUnited States Tax Court · 1973
- Anchor Coupling Company, Inc. v. United StatesCourt of Appeals for the Seventh Circuit · 1970
- Fed. Sec. L. Rep. P 95,723 Jerry D. Fridrich v. J. C. BradfordCourt of Appeals for the Sixth Circuit · 1976
7 more not listed; retrieve them via the Exa API.
3Cited by18 opinions
- Davis v. CommissionerUnited States Tax Court · 1980
- Soelling v. CommissionerUnited States Tax Court · 1978
- Wagner v. CommissionerUnited States Tax Court · 1982
- Barrett v. CommissionerUnited States Tax Court · 1991
- Ostrom v. CommissionerUnited States Tax Court · 1981
13 more not listed; retrieve them via the Exa API.