Lilly et al. v. Commissioner of Internal Revenue (343 U.S. 90)
U.S. Supreme Court · decided March 10, 1952 · Supreme Court Database (Spaeth)
- Citation
- 343 U.S. 90 · 72 S. Ct. 497
- Decided
- March 10, 1952
- Term
- October Term 1951
- Vote
- 8–0
- Majority author
- Justice Burton
- Issue area
- Federal Taxation
- Disposition
- Reversed and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
Opinion excerpt
Mr. Justice Burton delivered the opinion of the Court. Petitioners, Thomas B. Lilly and Helen W. Lilly, his wife, were engaged in the optical business in North Carolina and Virginia in 1943 and 1944. Pursuant to agreements reflecting an established and widespread practice in that industry in those localities, they paid to the respective doctors, who prescribed the eyeglasses which they sold, one-third of the retail sales price received for the glasses. The question here is whether such payments were deductible by petitioners as ordinary and necessary business expenses under §23 (a)(1)(A) of the Internal Revenue Code. For the reasons hereafter stated we hold that they were. Petitioners owned and operated as partners the City Optical Company with offices in Wilmington, Fayetteville and Greensboro, North Carolina, and Richmond, Virginia. Petitioner Helen W. Lilly also owned and operated the Duke Optical Company in Fayetteville. Since long before 1922 when Thomas B. Lilly established his business in Wilmington, eye doctors, in that locality and to a substantial extent throughout comparable communities in North Carolina, Virginia and elsewhere in the United States, not only examined their patients’ eyes and prescribed glasses, but also sold them the glasses. The doctors bought the frames and lenses at wholesale, prepared and fitted the glasses to the patients and sold the glasses…
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