Amdahl Corporation and Consolidated Subsidiaries - Page 1

                                   108 T.C. No. 24                                    

                               UNITED STATES TAX COURT                                

                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 2944-95.                     Filed June 17, 1997.           

                 P paid relocation expenses of its employees and                      
                 provided financial assistance in connection with                     
                 the sale of their residences.  P contracted with                     
                 relocation service companies (RSC) to manage the                     
                 sale of the employees' residences.  The RSC paid                     
                 the employees their equity in their homes and paid                   
                 the costs of maintaining the residences, including                   
                 mortgage and property tax expenses, until third                      
                 parties purchased the residences.  P reimbursed the                  
                 RSC for its expenses and paid the RSC a fee.  The                    
                 relocating employees retained legal title to the                     
                 residences.  R disallowed a deduction to P for                       
                 certain payments to the RSC against ordinary income                  
                 and treated the payments as a capital loss.  R                       
                 argues that P acquired equitable ownership of the                    
                    Held: Neither P nor the RSC acquired legal or                     
                 equitable ownership of the residences for Federal                    

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