W. W. Windle Co. v. Commissioner
United States Tax Court
Petitioner, a wool processor, created Nor-West and acquired 72 percent of its stock, to manufacture woolen cloth. Petitioner's predominant motive for creating Nor-West was to have a captive customer for its processed wool. A secondary motive was to make a profitable investment. Petitioner subsequently made repeated loans and advances to Nor-West, which after 9 generally unsuccessful years went bankrupt.
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Petitioner, a wool processor, created Nor-West and acquired 72 percent of its stock, to manufacture woolen cloth. Petitioner's predominant motive for creating Nor-West was to have a captive customer for its processed wool. A secondary motive was to make a profitable investment. Petitioner subsequently made repeated loans and advances to Nor-West, which after 9 generally unsuccessful years went bankrupt. Held: On the facts, petitioner's stock in Nor-West was a capital asset in its hands and petitioner's losses therefrom were capital losses. The existence of a substantial investment motive…
1Opinion of the Court
OPINION
Petitioner first contends that it acquired the 3600 shares of common stock of Nor-West in 1961, and retained them until June 1970, solely for reasons germane to its business, and without any investment motive, and therefore the shares were not capital assets in petitioner’s hands. As a result, petitioner argues, upon the stock becoming worthless it is entitled either to an ordinary business loss deduction under section 165(a)8 or an ordinary and necessary business expense deduction under section 162(a).9
Respondent asserts that the shares of Nor-West stock held by petitioner were…
2Cases cited26 opinions
- Burnet v. HarmelSupreme Court of the United States · 1932
- Corn Products Refining Co. v. CommissionerSupreme Court of the United States · 1956
- Malat v. RiddellSupreme Court of the United States · 1966
- Hort v. CommissionerSupreme Court of the United States · 1941
- United States v. GeneresSupreme Court of the United States · 1972
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3Cited by70 opinions
- Recklitis v. CommissionerUnited States Tax Court · 1988
- Arkansas Best Corp. v. CommissionerSupreme Court of the United States · 1988
- In the Matter of Roger Roy Larson and Joan Rosemary Larson, Debtors-AppellantsCourt of Appeals for the Seventh Circuit · 1988
- W. W. Windle Company v. Commissioner of Internal RevenueCourt of Appeals for the First Circuit · 1977
- Miller v. CommissionerUnited States Tax Court · 1978
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