Automatic Sprinkler Co. v. Commissioner
United States Board of Tax Appeals
The payment of D corporation to the Government of a lump sum in compromise of the liability of N corporation, its predecessor, for taxes, interest and penalties of earlier years, the amount of which is equal to 25 per cent of the assessment plus interest, is not deductible by D as a payment of interest to the extent of 25 per cent of the interest assessed, because (1) no part of the payment is identifiable, (2) the whole payment was consideration for D's purchase of N's…
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The payment of D corporation to the Government of a lump sum in compromise of the liability of N corporation, its predecessor, for taxes, interest and penalties of earlier years, the amount of which is equal to 25 per cent of the assessment plus interest, is not deductible by D as a payment of interest to the extent of 25 per cent of the interest assessed, because (1) no part of the payment is identifiable, (2) the whole payment was consideration for D's purchase of N's assets, and was neither D's taxes nor interest.
1Opinion of the Court
*161OPINION.
Sternhagen :
The Commissioner determined a deficiency oí $2,958.88 in petitioner’s income tax for 1929. Only one of several items adjusted by the Commissioner is assailed by petitioner. The facts in respect of this item are embodied in a written stipulation, which need not be copied here.
The petitioner, a Delaware corporation, succeeded in 1922 a New York corporation of the same name by acquiring its assets in.consideration for certain debentures, shares, cash and the assumption of its liabilities. When in 1927 a deficiency was assessed against the New York corporation of $34,909.41 in…
2Cited by13 opinions
- Borbonus v. CommissionerUnited States Tax Court · 1964
- David R. Webb Co. v. CommissionerUnited States Tax Court · 1981
- Lustig v. United StatesUnited States Court of Claims · 1956
- Holdcroft Transp. Co. v. CommissionerUnited States Tax Court · 1945
- Automatic Sprinkler Co. v. CommissionerUnited States Board of Tax Appeals · 1932
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