Summary
In CIR v. Wayne Coal Mining Co., 209 F.2d 152 (C.A.3, 1954), we rejected the Commissioner's argument that the expenses must have some prospective effect before they would be deductible and held in accordance with the weight of authority that expenses incidental to dissolution were paid in carrying on a trade or business.
Summary of this case from Estate of Walling v. C.I.ROpinion
Nos. 11195, 11196.
Argued January 5, 1954.
Decided January 12, 1954.
Joseph F. Goetten, Washington, D.C. (H. Brian Holland, Asst. Atty. Gen., Ellis N. Slack, Lee A. Jackson, Sp. Assts. to Atty. Gen., on the brief), for appellant.
Lee W. Eckels, Pittsburgh, Pa. (Thorp, Reed Armstrong, Pittsburgh, Pa., on the brief), for respondents.
Before GOODRICH, STALEY and HASTIE, Circuit Judges.
We are asked to decide whether expenses incurred by a corporation in distributing its assets on liquidation are deductible under section 23(a)(1)(A) of the Internal Revenue Code, 26 U.S.C.A. § 23(a)(1)(A), as ordinary and necessary expenses of carrying on a trade or business. The Tax Court in a carefully considered opinion, allowed the deduction. The Commissioner has filed this petition for review.
A series of cases sustains the Tax Court's conclusion. United States v. Arcade Co., 6 Cir., 1953, 203 F.2d 230; Braicks v. Henricksen, D.C.W.D.Wash. 1942, 43 F. Supp. 254, affirmed on other grounds, 9 Cir., 1943, 137 F.2d 632; Pacific Coast Biscuit Co. v. Commissioner, 1935, 32 B.T.A. 39; Laster v. Commissioner, 1940, 43 B.T.A. 159, affirmed in part and reversed in part on other grounds, 5 Cir., 1942, 128 F.2d 4; Meurer Steel Barrel Co. v. Commissioner, 1 CCH TC Mem.Dec. 721 (1943), affirmed on other grounds, 3 Cir., 1944, 144 F.2d 282, certiorari denied, 324 U.S. 860, 65 S.Ct. 864, 89 L.Ed. 1417, rehearing denied, 1945, 325 U.S. 892, 65 S.Ct. 1182, 89 L.Ed. 2004; Rite-Way Products, Inc. v. Commissioner, 1949, 12 T.C. 475. The only authority pointing to a contrary result is Motion Picture Capital Corp. v. Commissioner, 2 Cir., 1936, 80 F.2d 872. Whether or not that case is distinguishable from the present situation, we see no reason to disturb the rule enunciated in the line of decisions above cited.
The judgment of the Tax Court will be affirmed.