Legal Opinion

Snap-Drape v. Commissioner

United States Tax Court

Decided July 13, 1995No. Docket No. 2174-93Published

During taxable year 1990, P made contributions to its ESOP in the amount of $ 240,732 and claimed a deduction for the entire amount under sec. 404(a), I.R.C.

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During taxable year 1990, P made contributions to its ESOP in the amount of $ 240,732 and claimed a deduction for the entire amount under sec. 404(a), I.R.C. P also paid to the ESOP a cash dividend with respect to its common stock in the amount of $ 1,440,000. The ESOP transferred the entire amount of the dividend to the Bank as payment of interest and principal under a note, executed for purposes of purchasing securities of P. On its 1990 Federal income tax return, P claimed a deduction with respect to the cash dividend paid to the ESOP in the amount of $ 1,440,000 under sec. 404(k), I.R.C.…

1Opinion of the Court

SNAP-DRAPE, INC., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Snap-Drape v. Commissioner

Docket No. 2174-93

United States Tax Court

105 T.C. 16; 1995 U.S. Tax Ct. LEXIS 38; 105 T.C. No. 2; 19 Employee Benefits Cas. (BNA) 1592;

July 13, 1995, Filed

Decision will be entered under Rule 155.

During taxable year 1990, P made contributions to its ESOP in the amount of $ 240,732 and claimed a deduction for the entire amount under sec. 404(a), I.R.C. P also paid to the ESOP a cash dividend with respect to its common stock in the amount of $ 1,440,000. The ESOP transferred the entire amount of…

2Cases cited23 opinions

  1. Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc.Supreme Court of the United States · 1984
  2. New Colonial Ice Co. v. HelveringSupreme Court of the United States · 1934
  3. Rowan Cos. v. United StatesSupreme Court of the United States · 1981
  4. Joseph R. Dileo, Mary A. Dileo, Walter E. Mycek, Jr., Michele A. Mycek and Arcelo Reproduction Company, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1992
  5. Anderson, Clayton & Co., Plaintiff-Appellee-Cross-Appellant v. United States of America, Defendant-Appellant-Cross-AppelleeCourt of Appeals for the Fifth Circuit · 1977

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