R. R. Hensler, Inc. v. Commissioner
United States Tax Court
Petitioner entered into a contract to excavate dirt and debris that had accumulated behind a dam. Heavy rain storms in early 1969 caused massive flooding behind the dam and buried or damaged much of petitioner's equipment used on the project.
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Petitioner entered into a contract to excavate dirt and debris that had accumulated behind a dam. Heavy rain storms in early 1969 caused massive flooding behind the dam and buried or damaged much of petitioner's equipment used on the project. Petitioner agreed with insurance company to recover and repair the equipment, but due to limits in the insurance policy, petitioner was forced to bring suit against the insurance company for additional benefits, which was settled in 1972. Petitioner deducted its expenditures currently as business expense and included insurance payments received in…
1Opinion of the Court
Drennen, Judge:
Respondent determined the following deficiencies in petitioner’s income tax:
FYE Jan. 31— Deficiency
1968 . $112,230.93
1969 . 122,390.40
FYE Jan. 31— Deficiency
1970. $194,682.36
1972 . 51,378.36
The issues1 presented for our resolution are the following:(1) Whether petitioner’s expenditures for repairs of equipment damaged by floods constituted ordinary and necessary business expenses within the purview of section 162,1.R.C. 1954.2(2) If petitioner’s expenditures are not deductible under section 162, but can only be deducted pursuant to the rules and regulations of section 165, is…
2Cases cited17 opinions
- Welch v. HelveringSupreme Court of the United States · 1933
- Deputy, Administratrix v. Du PontSupreme Court of the United States · 1940
- Kornhauser v. United StatesSupreme Court of the United States · 1928
- Commissioner v. TellierSupreme Court of the United States · 1966
- Illinois Merchants Trust Co. v. CommissionerUnited States Board of Tax Appeals · 1926
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