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income tax purposes. Held, further, P is entitled
to deduct payments to the RSC as ordinary and
necessary business expenses. Sec. 162(a), I.R.C.
Frederick R. Chilton, Jr., Janet S. Bianchi, Paolo M. Dau,
and John J. Steele, for petitioner.
Andrew P. Crousore and Ewan D. Purkiss, for respondent.
GERBER, Judge: Respondent determined deficiencies in
petitioner's Federal income tax as follows:
Tax Year Ended Deficiency
Dec. 30, 1983 $25,528,729
Dec. 28, 1984 6,245,206
Dec. 27, 1985 4,394,198
Dec. 26, 1986 4,038,178
After concessions, the issue for decision is whether
payments made by petitioner to relocation service companies to
assist in the disposition of the homes of its employees who
relocate in connection with their employment are deductible
against ordinary income or must be treated as a capital loss.
FINDINGS OF FACTS1
Petitioner is a Delaware corporation with its principal
place of business in Sunnyvale, California. It develops,
manufactures, markets, and services large-scale computer systems,
storage products, communications systems, software, and
1The parties' stipulation of facts and the attached exhibits
are incorporated by this reference.
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