Norwest Corp. v. Commissioner
United States Tax Court
D and N entered into a transaction that resulted in N's owning all the stock of an entity of which D was a part. P concedes that sec. 263(a), I.R.C., requires that D capitalize the costs that were directly related to the transaction. P disputes R's determination that sec. 162(a), I.R.C., does not let D deduct investigatory and due diligence costs and all of its officers' salaries.
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D and N entered into a transaction that resulted in N's owning all the stock of an entity of which D was a part. P concedes that sec. 263(a), I.R.C., requires that D capitalize the costs that were directly related to the transaction. P disputes R's determination that sec. 162(a), I.R.C., does not let D deduct investigatory and due diligence costs and all of its officers' salaries. The investigatory costs relate primarily to services rendered by L, a law firm, before D agreed to participate in the transaction. D retained L to investigate whether a reorganization-like transaction with N would…
1Opinion of the Court
Laro, Judge:
Norwest Corp. (Norwest) & Subsidiaries, Successor in Interest to Davenport Bank & Trust Co. (DBTC) & Subsidiaries, petitioned the Court to redetermine respondent’s determination of a $132,088 deficiency in dbtc’s 1991 consolidated Federal income tax. Following petitioner’s concessions, the only issue left to decide is whether section 162(a) allows dbtc to deduct investigatory costs, due diligence costs, and officers’ salaries which respondent determined were attributable to an acquisition of DBTC. We hold that dbtc may not deduct any of these costs. Unless otherwise stated,…
2Cases cited29 opinions
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- Hertz Corp. v. United StatesSupreme Court of the United States · 1960
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3Cited by29 opinions
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- Morehouse v. CommissionerUnited States Tax Court · 2013
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