Schalk Chemical Co. v. Commissioner
United States Tax Court
1. Corporation, on an accrual basis, held not entitled to deduct as an ordinary and necessary business expense a liability it voluntarily assumed in 1950 to reimburse three beneficiaries of a spend-thrift trust, which held all of its stock, for a downpayment of $ 25,000 made by them in 1948, pursuant to the terms of an agreement with S, the fourth beneficiary, wherein S agreed to sell, and they agreed to buy, for $ 45,000 his one-sixth minority interest in the stock of the…
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1. Corporation, on an accrual basis, held not entitled to deduct as an ordinary and necessary business expense a liability it voluntarily assumed in 1950 to reimburse three beneficiaries of a spend-thrift trust, which held all of its stock, for a downpayment of $ 25,000 made by them in 1948, pursuant to the terms of an agreement with S, the fourth beneficiary, wherein S agreed to sell, and they agreed to buy, for $ 45,000 his one-sixth minority interest in the stock of the corporation at the termination of the trust. 2. Corporation held not to be entitled to deduct as an ordinary and…
1Opinion of the Court
OPINION*.
Baum, Judge,:
Schalk accrued on its books and deducted in its return for 1950 the liability, which it assumed in the assignment agreement of December 29,1950, to pay $45,000 to Hazel I. Farman, Patricia Baker, Evelyn Marlow, and Horace O. Smith, Jr., and interest at 5 per cent per annum on $25,000 from January 15,1948. The respondent disallowed the claimed deduction. Petitioners now concede that $20,000 of the $45,000 is not deductible by Schalk, but contend that the remaining $25,000 plus the interest is deductible by it as an ordinary and necessary business expense.
In support of…
2Cases cited10 opinions
- Wall v. United StatesCourt of Appeals for the Fourth Circuit · 1947
- Paramount-Richards Theatres, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1946
- Joseph R. Holsey and Eleanor T. Holsey v. Commissioner of Internal RevenueCourt of Appeals for the Third Circuit · 1958
- Monroe Zipp and Helen Zipp v. Commissioner of Internal Revenue, Bernard Zipp and Jean B. Zipp v. Commissioner of Internal RevenueCourt of Appeals for the Sixth Circuit · 1958
- Catholic News Publishing Co. v. CommissionerUnited States Tax Court · 1948
5 more not listed; retrieve them via the Exa API.
3Cited by31 opinions
- McSpadden v. CommissionerUnited States Tax Court · 1968
- Edgar v. CommissionerUnited States Tax Court · 1971
- Smith v. CommissionerUnited States Tax Court · 1978
- J. Gordon Turnbull, Inc. v. CommissionerUnited States Tax Court · 1963
- Mray A. Maher and Rose M. Maher v. Commissioner of Internal Revenue, Ray A. Maher, Transferee v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1972
26 more not listed; retrieve them via the Exa API.