North American Loan & Thrift Co. v. Commissioner
United States Tax Court
1. Petitioner purchased all of the outstanding stock of G, a corporation engaged in the small-loan business, in October 1950; it thereupon promptly liquidated G. The purchase price was in excess of G's then net worth, and such excess was paid primarily to obtain G's loans receivable, which had a known average life of 14 months. Included in the purchase contract was a covenant by G's sole stockholder not to compete with petitioner.
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1. Petitioner purchased all of the outstanding stock of G, a corporation engaged in the small-loan business, in October 1950; it thereupon promptly liquidated G. The purchase price was in excess of G's then net worth, and such excess was paid primarily to obtain G's loans receivable, which had a known average life of 14 months. Included in the purchase contract was a covenant by G's sole stockholder not to compete with petitioner. Held, petitioner is not entitled to an amortization deduction in 1952 with regard to the premium paid for G's loans receivable since the 14-month period had already…
1Opinion of the Court
OPINION.
Raum, Judge:
1. Amortisation deduction. — On its 1952 corporate income tax return petitioner deducted an amount of $4,804.70 as “amortized premiums on loans purchased.” The Commissioner disallowed this deduction. In its original petition to this Court, petitioner changed its theory in regard to this item and alleged that it was deductible as a ratable portion of an amount paid for a covenant not to compete. By amendment to the petition, petitioner again adopted the theory of the return and alleged, in the alternative, that the item was deductible as part of the amortization of a…
2Cases cited18 opinions
- Burnet v. HarmelSupreme Court of the United States · 1932
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