Arthur H. Du Grenier, Inc. v. Commissioner
United States Tax Court
Petitioner made payment to the estate of a former shareholder in settlement of a cause of action wherein the estate asserted that it received less than fair market value on petitioner's redemption of its stock. Held, through application of the origin-of-the-claim test, as originally stated in United States v. Gilmore, 372 U.S. 39 (1963), the settlement payment is not an ordinary and necessary business expense, but rather, a nondeductible capital expenditure.
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Petitioner made payment to the estate of a former shareholder in settlement of a cause of action wherein the estate asserted that it received less than fair market value on petitioner's redemption of its stock. Held, through application of the origin-of-the-claim test, as originally stated in United States v. Gilmore, 372 U.S. 39 (1963), the settlement payment is not an ordinary and necessary business expense, but rather, a nondeductible capital expenditure. Held, further, the same result is obtained through the application of the principle as stated in Arrowsmith v. Commissioner, 344 U.S. 6…
1Opinion of the Court
Arthur H. DuGrenier, Inc., Petitioner v. Commissioner of Internal Revenue, Respondent
Arthur H. Du Grenier, Inc. v. Commissioner
Docket No. 502-70
United States Tax Court
58 T.C. 931; 1972 U.S. Tax Ct. LEXIS 63;
August 29, 1972, Filed
Decision will be entered for the respondent.
Petitioner made payment to the estate of a former shareholder in settlement of a cause of action wherein the estate asserted that it received less than fair market value on petitioner's redemption of its stock. Held, through application of the origin-of-the-claim test, as originally stated in United States v. Gilmore, 372…
2Cases cited18 opinions
- North American Oil Consolidated v. BurnetSupreme Court of the United States · 1932
- United States v. GilmoreSupreme Court of the United States · 1963
- Woodward v. CommissionerSupreme Court of the United States · 1970
- Arrowsmith v. CommissionerSupreme Court of the United States · 1952
- United States v. LewisSupreme Court of the United States · 1951
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