United States v. Hilton Hotels Corporation, No. 528
| Court | United States Supreme Court |
| Writing for the Court | MARSHALL |
| Citation | 25 L.Ed.2d 585,397 U.S. 580,90 S.Ct. 1307 |
| Parties | UNITED STATES, Petitioner, v. HILTON HOTELS CORPORATION |
| Docket Number | No. 528 |
| Decision Date | 20 April 1970 |
v.
HILTON HOTELS CORPORATION.
Page 581
Johnnie McK. Walters, Washington, D.C., for petitioner.
Milton A. Levenfeld, Chicago, Ill., for respondent.
Mr. Justice MARSHALL delivered the opinion of the Court.
This is the companion case to Wood-ward v. Commissioner of Internal Revenue, 397 U.S. 572, 90 S.Ct. 1302, 25 L.Ed.2d 577, and presents a similar question involving the tax treatment of appraisal litigation expenses.
In 1953 taxpayer Hilton Hotels Corporation, which owned close to 90% of the common shares of the Hotel Waldorf-Astoria Corporation, determined to merge the two companies. Hilton retained a consulting firm to prepare a merger study to determine a fair rate of exchange between Hilton stock and Waldorf stock. After this study was completed, on November 12, 1953, Hilton and Waldorf entered into a merger agreement under which Hilton would be the surviving corporation, and 1.25 shares of Hilton stock would be offered for each outstanding Waldorf share not already held by Hilton. On December 28, Hilton voted its Waldorf stock to approve the merger by the requisite majority. Prior to the vote, the holders of about 6% of the Waldorf shares had filed with Waldorf their written objections
Page 582
to the merger, and demanded payment for their stock, pursuant to § 91 of the New York Stock Corporation Law, McKinney's Consol.Laws, c. 59.
On December 31, 1953, Hilton filed the merger agreement and the certificate of consolidation with the Secretary of State of New York, thus consummating the merger under New York law. On January 7, 1954, Hilton made a cash offer to the dissenting Waldorf shareholders, which they rejected. The dissenters then began appraisal proceedings in the New York courts, pursuant to § 21 of the New York Stock Corporation Law.
Between January and May 1954, Hilton asked its consulting firm to value the Waldorf stock as of December 27, 1953, the day prior to the Waldorf shareholders' vote approving the merger. Hilton also obtained the services of lawyers, and other professional services, in connection with the appraisal litigation. The appraisal proceeding was finally terminated in June 1955, when the state court approved a settlement agreed to by the parties.
Hilton deducted the fees paid to the consulting firm, and the cost of legal and other professional services arising out of the appraisal proceeding, as ordinary and necessary business expenses under § 162 of the Internal Revenue Code of 1954, 26 U.S.C. § 162. The Commissioner of Internal Revenue disallowed the deduction on the ground that the payments were capital expenditures. Hilton paid the tax and sued for a refund in the District Court. In the course of that suit, Hilton conceded, and the court held, that the payments to the consulting firm for the pre-merger determination of fair value were a non-deductible capital outlay. But the District Court...
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Fort Howard Corp. & Subsidiaries v. Comm'r of Internal Revenue, 6362–92.
...(disallowing deductions for legal, brokerage, and accounting fees incident to a redemption), and United States v. Hilton Hotels Corp., 397 U.S. 580 (1970) (same), constituted “good law”. However, the statute applies to all redemptions and “ any amount” incurred in connection therewith. Sec.......
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Metrocorp, Inc. v. Comm'r of Internal Revenue, 19780–98.
...sale. See, e.g., Woodward v. Commissioner, 1970, 397 U.S. 572, 90 S.Ct. 1302, 25 L.Ed.2d 577; United States v. Hilton Hotels Corp., 1970, 397 U.S. 580, 90 S.Ct. 1307, 25 L.Ed.2d 585. Further, the Code provides that the requirement of capitalization takes precedence over the allowance of ded......
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Lychuk v. Comm'r of Internal Revenue, 11794–99
...expenses related to the asset's acquisition. Woodward v. Commissioner, supra at 576–577; see United States v. Hilton Hotels Corp., 397 U.S. 580, 90 S.Ct. 1307, 25 L.Ed.2d 585 (1970); see also Ellis Banking Corp. v. Commissioner, supra at 1379. Capitalizable expenditures also include compens......
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NCNB Corp. v. U.S., 78-1771
...16 L.Ed.2d 185 (1966); Woodward v. Commissioner, 397 U.S. 572, 90 S.Ct. 1302, 25 L.Ed.2d 577 (1970); United States v. Hilton Hotels Corp., 397 U.S. 580, 90 S.Ct. 1307, 25 L.Ed.2d 585 (1970); United States v. Mississippi Chemical Corp., 405 U.S. 298, 92 S.Ct. 908, 31 L.Ed.2d 217 (1972); Comm......
-
Fort Howard Corp. & Subsidiaries v. Comm'r of Internal Revenue, 6362–92.
...(disallowing deductions for legal, brokerage, and accounting fees incident to a redemption), and United States v. Hilton Hotels Corp., 397 U.S. 580 (1970) (same), constituted “good law”. However, the statute applies to all redemptions and “ any amount” incurred in connection therewith. Sec.......
-
Metrocorp, Inc. v. Comm'r of Internal Revenue, 19780–98.
...sale. See, e.g., Woodward v. Commissioner, 1970, 397 U.S. 572, 90 S.Ct. 1302, 25 L.Ed.2d 577; United States v. Hilton Hotels Corp., 1970, 397 U.S. 580, 90 S.Ct. 1307, 25 L.Ed.2d 585. Further, the Code provides that the requirement of capitalization takes precedence over the allowance of ded......
-
Lychuk v. Comm'r of Internal Revenue, 11794–99
...expenses related to the asset's acquisition. Woodward v. Commissioner, supra at 576–577; see United States v. Hilton Hotels Corp., 397 U.S. 580, 90 S.Ct. 1307, 25 L.Ed.2d 585 (1970); see also Ellis Banking Corp. v. Commissioner, supra at 1379. Capitalizable expenditures also include compens......
-
NCNB Corp. v. U.S., 78-1771
...16 L.Ed.2d 185 (1966); Woodward v. Commissioner, 397 U.S. 572, 90 S.Ct. 1302, 25 L.Ed.2d 577 (1970); United States v. Hilton Hotels Corp., 397 U.S. 580, 90 S.Ct. 1307, 25 L.Ed.2d 585 (1970); United States v. Mississippi Chemical Corp., 405 U.S. 298, 92 S.Ct. 908, 31 L.Ed.2d 217 (1972); Comm......