- 4 -
7. Conclusion...................................... 59
D. Income Tax Consequences............................. 60
FINDINGS OF FACT
I. Introduction
Some of the facts have been stipulated and are so found.
The stipulations of facts filed by the parties, with attached
exhibits, are incorporated herein by this reference.
Petitioner, a Delaware corporation, maintained its principal
office in New York, New York, at the time the petition was filed.
II. Graphic Design Issue
A. R.J. Reynolds Tobacco Co.; Nature of the Dispute
During 1982, R.J. Reynolds Tobacco Co. (Reynolds), a New
Jersey corporation, was a member of the affiliated group. During
that year, Reynolds was engaged in the business of manufacturing
and marketing tobacco products. Reynolds had $3.6 billion of
sales in 1982 and, in reporting its income for Federal income tax
purposes, claimed a deduction for graphic design and package
design expenditures in the amount of $2,196,441 (the disallowed
deduction). Respondent disallowed that deduction on the grounds
that petitioner had failed to establish that the disallowed
deduction represented an ordinary and necessary business expense
or was otherwise deductible. (The principal dispute between the
parties is whether the disallowed deduction is not a section 162
expense because it is a capital expenditure.)
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011