Fort Howard Corp. v. Commissioner
United States Tax Court
In 1988, P was the subject of a leveraged buyout (LBO) that was treated as a redemption for Federal tax purposes. P incurred numerous costs in obtaining the debt financing used to complete the LBO.
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In 1988, P was the subject of a leveraged buyout (LBO) that was treated as a redemption for Federal tax purposes. P incurred numerous costs in obtaining the debt financing used to complete the LBO. P capitalized these costs and amortized them over the life of the debt, deducting in full the costs attributable to debt retired in 1988. In addition, P now contends that a portion of an organizer fee constituted "additional interest" fully deductible in 1988. Held:Sec. 162(k), I.R.C., prohibits corporate deductions for amounts "paid or incurred by a corporation in connection with the redemption of…
1Opinion of the Court
Ruwe, Judge:
Respondent determined deficiencies in petitioner’s 1985 and 1988 Federal income taxes in the respective amounts of $2,445,098 and $32,557,015.
After severance of certain issues for trial and concessions by the parties, the issues for decision are: (1) Whether certain deductions taken by petitioner in 1988 are prohibited by section 162(k);1 and (2) whether certain expenses incurred by petitioner in 1988 constitute a fee for services as opposed to interest deductible under section 163.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. The stipulation of facts,…
2Cases cited66 opinions
- Welch v. HelveringSupreme Court of the United States · 1933
- United States v. American Trucking AssociationsSupreme Court of the United States · 1940
- Deputy, Administratrix v. Du PontSupreme Court of the United States · 1940
- Indopco, Inc. v. CommissionerSupreme Court of the United States · 1992
- Crane v. CommissionerSupreme Court of the United States · 1947
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3Cited by41 opinions
- Tigers Eye Trading, LLC v. Comm'rUnited States Tax Court · 2012
- Berry Petroleum Co. v. CommissionerUnited States Tax Court · 1995
- Fed. Home Loan Mortg. Corp. v. Comm'rUnited States Tax Court · 2003
- Fort Howard Corp. v. CommissionerUnited States Tax Court · 1996
- Biehl v. Comm'rUnited States Tax Court · 2002
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