Basic Products Corp. v. Department of Taxation

The question which we must resolve in this case may be stated as follows: When a publicly held corpo ration borrows money for the purpose of retiring an entire issue of its preferred stock, is the corporation’s payment of interest on such money to be considered ordinary and necessary expenses in the operation of the business of the corporation from which its income is derived, so as to be deductible for Wisconsin income-tax purposes under the provisions of sec. 71.04 (2), Stats.?

The department rule (6 Wis. Adm. Code, sec. Tax 3.20) was adopted by the Department of Taxation as its…