United States Mineral Prods. Co. v. Comm'r
United States Tax Court
Petitioner is a United States corporation engaged in the manufacture and sale within this country of sprayed-insulation products. Prior to 1959 its products were sold to a distributor in Canada who applied the products and sold to other applicators.
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Petitioner is a United States corporation engaged in the manufacture and sale within this country of sprayed-insulation products. Prior to 1959 its products were sold to a distributor in Canada who applied the products and sold to other applicators. In order to compete against Canadian products, petitioner organized a wholly owned subsidiary under Canadian law and transferred to it in March 1959 certain rights relating to patents, trademarks, and know-how which comprised the collective technical and production knowledge essential to petitioner's business. Through its own manufacturing and…
1Opinion of the Court
OPINION
Eespondent’s position that the payments in issue are taxable as ordinary income is based upon four principal arguments: (1) The Canadian agreement was not a bona fide agreement of sale but rather a paper transaction set up between a parent corporation and its wholly owned subsidiary to alter the tax consequences of a preexisting licensing arrangement; (2) petitioner did not own the patents listed in the Canadian agreement but had only the right to grant CAFCAN a nonexclusive license to manufacture and to license others to use the patents in Canada; (3) the CAFCO formulas and “know-how”…
2Cases cited32 opinions
- Waterman v. MacKenzieSupreme Court of the United States · 1891
- Watson v. CommissionerSupreme Court of the United States · 1953
- Williams v. McGowanCourt of Appeals for the Second Circuit · 1945
- Allen, Collector of Internal Revenue v. WernerCourt of Appeals for the Fifth Circuit · 1951
- Commissioner of Internal Revenue v. Celanese Corp.Court of Appeals for the D.C. Circuit · 1944
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3Cited by4 opinions
- Erbamont Inc. v. Cetus Corp.District Court, D. Delaware · 1989
- Swedlow, Inc., a Corporation v. Rohm & Haas Company, a CorporationCourt of Appeals for the Ninth Circuit · 1972
- Pullman Inc. v. W. R. Grace & Co.District Court, W.D. Oklahoma · 1976
- United States Mineral Prods. Co. v. Comm'rUnited States Tax Court · 1969