Chemplast, Inc. v. Commissioner
United States Tax Court
Petitioner's officers believed that a porous form of fluorocarbon plastic which petitioner had invented could be developed for use in the manufacture and sale of fuel-cell electrodes. To head this development work, petitioner wished to employ Peter M. Richman, but Richman demanded an equity interest in the organization through which the work was to be done.
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Petitioner's officers believed that a porous form of fluorocarbon plastic which petitioner had invented could be developed for use in the manufacture and sale of fuel-cell electrodes. To head this development work, petitioner wished to employ Peter M. Richman, but Richman demanded an equity interest in the organization through which the work was to be done. In order to obtain his services, a new corporation was created to which petitioner made advances of cash, assigned its own personnel, etc. The new corporation failed, and petitioner's advances to it were not fully reimbursed. Held,…
1Opinion of the Court
Featherston, Judge:
Respondent determined a deficiency of $35,122.93 in petitioner’s Federal income tax for the fiscal year ending February 28, 1967. The sole issue for decision is whether petitioner’s unrecovered advances to another corporation, in which it held stock, gave rise to a capital loss deduction, or whether these amounts are deductible from ordinary income as either an ordinary and necessary business expense under section 162,1 an uncompensated loss under section 165, or a business bad debt under section 166.
FINDINGS OF FACT
Chemplast, Inc. (hereinafter referred to as petitioner),…
2Cases cited19 opinions
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- Fin Hay Realty Co. v. United StatesCourt of Appeals for the Third Circuit · 1968
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- Commissioner of Internal Revenue v. The Bagley & Sewall Co.Court of Appeals for the Second Circuit · 1955
- Steadman v. Comm'rUnited States Tax Court · 1968
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