Schultz v. COMMISSIONER OF INTERNAL REVENUE, 17764.
| Decision Date | 09 January 1970 |
| Docket Number | No. 17764.,17764. |
| Citation | 420 F.2d 490 |
| Parties | George L. SCHULTZ and Margaret F. Schultz, Appellants v. COMMISSIONER OF INTERNAL REVENUE. |
| Court | U.S. Court of Appeals — Third Circuit |
John P. Lipscomb, Lee, Toomey & Kent, Washington, D. C. (Thomas E. Jenks, Washington, D. C., Myles A. Cane, New York City, on the brief), for appellants.
William L. Goldman, U. S. Dept. of Justice, Tax Division, Washington, D. C. (Johnnie M. Walters, Asst. Atty. Gen., Lee A. Jackson, Meyer Rothwacks, Lester B. Snyder, Attys., Dept. of Justice, Washington, D. C., on the brief), for appellee.
Before KALODNER, STALEY and FREEDMAN, Circuit Judges.
On this appeal the appellant taxpayers challenge the Tax Court's Decision that their four year pre-payment of storage charges, insurance premiums and state ad valorem taxes, in conjunction with their non-business purchase of substantial quantities of bulk whiskey, were not deductible as ordinary and necessary expenses under Section 212(2) of the 1954 Internal Revenue Code, but instead should be added to the cost of the whiskey.
The distinction between an ordinary expense and a capital expenditure in this field is based on a factual analysis of the relationship of the expenses to the entire transaction. Although storage charges, insurance premiums, and property taxes are normally deductible as ordinary expenses, they are not deductible where they are incurred as an integal part of a capital transaction. The Tax Court's determination that the pre-payments here made were incurred as part of a capital transaction is essentially a factual determination.
On review of the record we cannot say that the factual determination made by the Tax Court is "clearly erroneous", and accordingly its Decision will be affirmed.
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...benefits certainly constitutes a yellow caution signal on our road to decision." Cf. Schultz, 50 T.C. 688, 694 (1968), affirmed per curiam 420 F.2d 490 (C. A.3, "We again emphashize that we are not dealing with a situation where the payment in question is for a benefit conferred which the p......
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...as ‘a yellow caution signal on our road to decision.‘ See Schultz v. Commissioner, 50 T.C. 688, 694 (1968), affd. per curiam 420 F.2d 490 (3d Cir. 1970). Petitioners cite cases in which courts have refused to recharacterize formal gifts of corporate stock to charitable foundations immediate......
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