Hudgins v. Commissioner
United States Tax Court
Petitioner, desirous of becoming supervisor within the framework of Alabama Market Centers, Inc., paid a total of $ 2,420 to that organization in 1967. Petitioner claimed that $ 1,800 of that total amount was fully deductible in 1967 because it represented damages paid for voiding the contract of the then supervisor who was to be replaced. Respondent disallowed that deduction contending that the $ 1,800 payment was a capital expenditure.
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Petitioner, desirous of becoming supervisor within the framework of Alabama Market Centers, Inc., paid a total of $ 2,420 to that organization in 1967. Petitioner claimed that $ 1,800 of that total amount was fully deductible in 1967 because it represented damages paid for voiding the contract of the then supervisor who was to be replaced. Respondent disallowed that deduction contending that the $ 1,800 payment was a capital expenditure. Held, $ 1,800 represented cost or expense of acquiring a capital asset and as such constituted capital expenditure.
1Opinion of the Court
Irwin, Judge:
The Commissioner determined a deficiency of $433.36 in petitioner’s income tax for the calendar year 1967. Due to concessions stipulated by the parties, the sole issue for our determination is whether certain amounts paid by petitioners to Alabama Market Centers, Inc., represent a nondeductible capital expenditure.
FINDINGS OF FACT
Some of the facts have been stipulated by the parties. The stipulation, together with the exhibits attached thereto, are incorporated herein by this reference.
Darrell D. Hudgins (hereinafter petitioner) and his wife, Doris L. Hudgins, filed a joint…
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