McGraw-Edison Co. v. United States

REED, Justice (Retired), sitting by designation.

Plaintiff sues to recover an alleged overpayment of federal corporation income taxes for the year 1945 in the amount of $27,588 plus interest. The issue basic to liability is whether the plaintiff, a government contractor, may ■deduct as an “ordinary and necessary” business expense1 damages paid to the. United States under the provisions of *454a contract prohibiting the utilization of child labor in its performance. For the reasons set out hereinafter we conclude that these amounts were not deductible and that judgment must be for the defendant.…