Central Foundry Co. v. Commissioner
United States Tax Court
In a proxy contest between management and a group of insurgent stockholders, the latter prevailed and obtained a majority of seats on petitioner's board of directors. Thereafter, petitioner's stockholders approved the payment of the ousted management's proxy-solicitation expenses as well as those of the insurgents (now the new management) incurred in 1959. The Commissioner has conceded, after originally disallowing, the deductibility of the ousted management's expenses.
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In a proxy contest between management and a group of insurgent stockholders, the latter prevailed and obtained a majority of seats on petitioner's board of directors. Thereafter, petitioner's stockholders approved the payment of the ousted management's proxy-solicitation expenses as well as those of the insurgents (now the new management) incurred in 1959. The Commissioner has conceded, after originally disallowing, the deductibility of the ousted management's expenses. Held, on this record, the payment of the insurgents' expenses was no less proximately related to petitioner's business than…
1Opinion of the Court
OPINION
Ratjm, Judge:
Central Foundry Co., the petitioner herein, is a publicly held corporation engaged in the business of manufacturing cast-iron soil pipe and fittings. Its stock is listed on the New York Stock Exchange. In May 1959, after a long and bitterly fought contest for the proxies of Central’s 4,900 shareholders, a group of stockholders-(the “committee”) succeeded in ousting incumbent management from control of Central’s board of directors. The dominant member of the committee, Gondelman, became chairman of the board, and another committee member, Farber, became vice chairman.…
2Cases cited19 opinions
- Commissioner v. CulbertsonSupreme Court of the United States · 1949
- Commissioner v. WilcoxSupreme Court of the United States · 1946
- Challenge Mfg. Co. v. CommissionerUnited States Tax Court · 1962
- Blackmer v. CommissionerCourt of Appeals for the Second Circuit · 1934
- Alleghany Corp. v. CommissionerUnited States Tax Court · 1957
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3Cited by4 opinions
- A.E. Staley Manufacturing Company and Subsidiaries v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1997
- Central Foundry Co. v. CommissionerUnited States Tax Court · 1967
- Hukkanen-Campbell v. CommissionerUnited States Tax Court · 2000
- Nidetch v. CommissionerUnited States Tax Court · 1978