Naylor v. Commissioner
United States Tax Court
Petitioner gave a written option to purchase stock owned by him for the "net value thereof as shown by the books" of the corporation.
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Petitioner gave a written option to purchase stock owned by him for the "net value thereof as shown by the books" of the corporation. Upon the exercise of the option, the optionee offered to pay the book value of the stock but petitioner concluded that he was justly entitled to the amount the optionee had contracted to receive on a resale, and engaged counsel, on a contingent fee basis, to endeavor to obtain his proportionate share of the price for which the optionee intended to sell all of the corporation's stock. Negotiations conducted by counsel resulted in a compromise settlement, reached…
1Opinion of the Court
OPINION.
Disney, Judge:
The fee of $28,000 paid to counsel, the reasonableness of which is not in controversy, is alleged by petitioner to be deductible as a nonbusiness expense under the provisions of section 23 (a) (2) of the Internal Revenue Code. Respondent insists that, as held by him in determining the deficiency, the amount constitutes a selling expense and, therefore, must be used as an offset in computing gain on the sale.
The parties differ widely on the basis for the negotiations conducted by petitioner’s counsel, the purpose of his employment and the legal effect of the results…
2Cases cited9 opinions
- Spreckels v. CommissionerSupreme Court of the United States · 1942
- Heller v. CommissionerUnited States Tax Court · 1943
- Megargel v. CommissionerUnited States Tax Court · 1944
- Heller v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1945
- Davis v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1945
4 more not listed; retrieve them via the Exa API.
3Cited by14 opinions
- Ticket Office Equipment Co. v. CommissionerUnited States Tax Court · 1953
- Doering v. CommissionerUnited States Tax Court · 1963
- Wagner v. CommissionerUnited States Tax Court · 1982
- MacHris v. CommissionerUnited States Tax Court · 1960
- Freeland v. CommissionerUnited States Tax Court · 1986
9 more not listed; retrieve them via the Exa API.