Indopco, Inc. v. Commissioner of Internal Revenue. (503 U.S. 79)
U.S. Supreme Court · decided February 26, 1992 · Supreme Court Database (Spaeth)
- Citation
- 503 U.S. 79 · 112 S. Ct. 1039
- Decided
- February 26, 1992
- Term
- October Term 1991
- Vote
- 9–0
- Majority author
- Justice Blackmun
- Issue area
- Federal Taxation
- Disposition
- Affirmed
- Outcome
- Petitioning party lost
- Ideological direction
- Liberal
Opinion excerpt
Justice Blackmun delivered the opinion of the Court. In this case we must decide whether certain professional expenses incurred by a target corporation in the course of a friendly takeover are deductible by that corporation as “ordinary and necessary” business expenses under § 162(a) of the Internal Revenue Code. I Most of the relevant facts are stipulated. See App. 12, 149. Petitioner INDOPCO, Inc., formerly named National Starch and Chemical Corporation and hereinafter referred to as National Starch, is a Delaware corporation that manufactures and sells adhesives, starches, and specialty chemical products. In October 1977, representatives of Unilever United States, Inc., also a Delaware corporation (Unilever), expressed interest in acquiring National Starch, which was one of its suppliers, through a friendly transaction. National Starch at the time had outstanding over 6,563,000 common shares held by approximately 3,700 shareholders. The stock was listed on the New York Stock Exchange. Frank and Anna Greenwall were the corporation’s largest shareholders and owned approximately 14.5% of the common. The Greenwalls, getting along in years and concerned about their estate plans, indicated that they would transfer their shares to Unilever only if a transaction tax free for them could be arranged. Lawyers representing both sides devised a “reverse subsidiary cash merger” that…
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