Ill. Tool Works v. Comm'r
United States Tax Court
P acquired the assets of D and assumed certain liabilities, including the contingent liability for a patent infringement claim. P was subsequently held liable for damages, interest, and court costs. HELD: P's payment in satisfaction of the patent infringement liability is a cost of acquiring the assets of D and must be capitalized in the year incurred.
1Opinion of the Court
Cohen, Judge:
Respondent determined deficiencies of $2,370,750 and $818,812, respectively, in petitioner’s consolidated Federal income tax for 1992 and 1993.
After concessions, the issue for decision is whether $6,956,590 of a payment made by petitioner in satisfaction of a court judgment, based on a patent infringement claim that was brought against an acquired corporation and assumed as a contingent liability by petitioner, should be capitalized as a cost of acquisition or deducted as a business expense. Unless otherwise indicated, all section references are to the Internal Revenue Code in…
2Cases cited16 opinions
- Deputy, Administratrix v. Du PontSupreme Court of the United States · 1940
- Indopco, Inc. v. CommissionerSupreme Court of the United States · 1992
- Commissioner v. TellierSupreme Court of the United States · 1966
- Woodward v. CommissionerSupreme Court of the United States · 1970
- Commissioner v. Lincoln Savings & Loan Ass'nSupreme Court of the United States · 1971
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3Cited by5 opinions
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- Illinois Tool Works Inc. And Subsidiaries v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 2004
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- Ill. Tool Works v. Comm'rUnited States Tax Court · 2001
- Illinois Tool Works, Inc. & Subsidiaries v. CommissionerUnited States Tax Court · 2001