Friendship Dairies, Inc. v. Commissioner
United States Tax Court
Through an intermediary, petitioner purchased computer equipment from O. Petitioner then leased the equipment to O for a period of 9 years. There was no business purpose or possibility of economic profit without taking the investment tax credit into account. Held: The investment tax credit is not a substitute for or component of economic profit. Petitioner's transaction had no economic substance and must be disregarded for Federal income tax purposes.
1Opinion of the Court
COHEN, Judge:
Respondent determined a deficiency of $298,672 in petitioner’s income tax for the taxable year ended September 27, 1980. Respondent also determined that such deficiency is subject to an addition to tax pursuant to section 6621(c).1
The issues for decision are as follows:(1) Whether petitioner’s purchase of an IBM. Model 3033N8 computer and related equipment was a transaction having economic substance so that such purchase must be respected for Federal income tax purposes;(2) Whether petitioner was the owner of the computer equipment for Federal income tax purposes;(3) Whether…
2Cases cited20 opinions
- Frank Lyon Co. v. United StatesSupreme Court of the United States · 1978
- Rice's Toyota World, Inc. (Formerly Rice Auto Sales, Inc.) v. Commissioner of Internal RevenueCourt of Appeals for the Fourth Circuit · 1985
- Beck v. CommissionerUnited States Tax Court · 1985
- Rose v. CommissionerUnited States Tax Court · 1987
- Rice's Toyota World, Inc. v. CommissionerUnited States Tax Court · 1983
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3Cited by29 opinions
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- Dixon v. CommissionerUnited States Tax Court · 1991
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