Lemery v. Commissioner
United States Tax Court
Petitioners, as shareholders of Palms Motel, Inc., an electing small business corporation engaged in the business of operating a motor hotel, each claimed a deduction on his return for 1960 for his respective share of the net operating loss reported by the corporation. The respondent determined that the deduction claimed by the corporation for amortization of a covenant not to compete was not allowable and increased the taxable income of each of the petitioners accordingly.
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Petitioners, as shareholders of Palms Motel, Inc., an electing small business corporation engaged in the business of operating a motor hotel, each claimed a deduction on his return for 1960 for his respective share of the net operating loss reported by the corporation. The respondent determined that the deduction claimed by the corporation for amortization of a covenant not to compete was not allowable and increased the taxable income of each of the petitioners accordingly. Held, (1) that neither the covenant not to compete nor the amount allocated thereto was separately bargained for; (2)…
1Opinion of the Court
OPINION
Section 1374 of subchapter S of the Internal Revenue Code of 1954 provides that a shareholder of an electing small business corporation shall be allowed a deduction from gross income for his taxable year in which the taxable year of the corporation ends, in an amount equal to his portion of the corporation’s net operating loss.
The petitioners, Raymond and Douglas Lemery, as shareholders of Palms Motel, Inc., an electing small business corporation engaged in the business of operating a motor hotel, each claimed a deduction on his return for the taxable year 1960, for his respective…
2Cases cited15 opinions
- Higgins v. SmithSupreme Court of the United States · 1940
- Crane v. CommissionerSupreme Court of the United States · 1947
- Schulz v. CommissionerCourt of Appeals for the Ninth Circuit · 1961
- O. H. Kruse Grain & Milling v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1960
- Annabelle Candy Co. v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1962
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3Cited by47 opinions
- Fox v. CommissionerUnited States Tax Court · 1983
- Estate of Baron v. CommissionerUnited States Tax Court · 1984
- Waddell v. CommissionerUnited States Tax Court · 1986
- Jackson v. CommissionerUnited States Tax Court · 1986
- Saviano v. CommissionerUnited States Tax Court · 1983
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