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Woodward v. Commissioner, 397 U.S. 572 (1970)
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General SummaryThis case is from a collection containing the full text of over 16,000 Supreme Court cases from 1793 to the present. The body of Supreme Court decisions are, effectively, the final interpretation of the Constitution. Only an amendment to the Constitution can permanently overturn an interpretation and this has happened only four times in American history.
Woodward v. Commissioner, 397 U.S. 572 (1970)
Woodward v. Commissioner No. 412 Argued February 26, 1970 Decided April 20, 1970 397 U.S. 572
CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
Syllabus
Petitioner taxpayers, majority stockholders of an Iowa corporation, voted for perpetual extension of the corporate charter, and, under Iowa law, became obliged to purchase at its "real value" the stock of a minority shareholder who had voted against the extension. On the parties’ failure to agree on the "real value" of the minority interest, petitioners brought an appraisal action in state court, and thereafter bought the minority stock at a value fixed by the court. In their federal income tax returns, petitioners claimed deductions as "ordinary . . . expenses paid . . . for the management, conservation, or maintenance of property held for the production of income" for attorneys’, accountants’, and appraisers’ fees in connection with the appraisal litigation. The Commissioner of Internal Revenue disallowed the deductions "because the fees represent capital expenditures in connection with the acquisition of capital stock of a corporation," a determination sustained by the Tax Court and the Court of Appeals. Petitioners contend that current deductibility is justified on the ground that the "primary purpose" of the litigation was not for defense or perfection of title (a nondeductible capital expenditure) but to determine the stock’s value.
Held: The expenses incurred by petitioners must be treated as part of their cost in acquiring the stock, rather than as ordinary expenses, since the appraisal proceeding was merely the substitute provided by state law for the process of negotiation to fix the price at which the stock was to be purchased. The appropriate standard here is the origin of the claim litigated, rather than the taxpayers’ "primary purpose" in incurring the appraisal litigation expenses. Pp. 575-579.
410 F.2d 313, affirmed.
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Chicago: U.S. Supreme Court, "Syllabus," Woodward v. Commissioner, 397 U.S. 572 (1970) in 397 U.S. 572 397 U.S. 573. Original Sources, accessed November 24, 2024, http://originalsources.com/Document.aspx?DocID=JAUQ5BWN24XPRU8.
MLA: U.S. Supreme Court. "Syllabus." Woodward v. Commissioner, 397 U.S. 572 (1970), in 397 U.S. 572, page 397 U.S. 573. Original Sources. 24 Nov. 2024. http://originalsources.com/Document.aspx?DocID=JAUQ5BWN24XPRU8.
Harvard: U.S. Supreme Court, 'Syllabus' in Woodward v. Commissioner, 397 U.S. 572 (1970). cited in 1970, 397 U.S. 572, pp.397 U.S. 573. Original Sources, retrieved 24 November 2024, from http://originalsources.com/Document.aspx?DocID=JAUQ5BWN24XPRU8.
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