George L. Schultz and Margaret F. Schultz v. Commissioner of Internal Revenue

OPINION OF THE COURT

On this appeal the appellant taxpayers challenge the Tax Court’s Decision that their four year pre-payment of storage charges, insurance premiums and state ad valorem taxes, in conjunction with their non-business purchase of substantial quantities of bulk whiskey, were not deductible as ordinary and necessary expenses under Section 212(2) of the 1954 Internal Revenue Code, but instead should be added to the cost of the whiskey.

The distinction between an ordinary expense and a capital expenditure in this field is based on a factual analysis of the relationship of the…