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acts and omissions occurring before the transaction.
The due diligence costs relate to services performed by
L in connection with N's due diligence review. The
disallowed officers' salaries were attributable to the
transaction.
Held: Sec. 162(a), I.R.C., does not let D deduct
any of the disputed costs.
Mark A. Hager, John R. Kalligher, William K. Wilcox, and
Walter A. Pickhardt, for petitioner.
Jack Forsberg, for respondent.
LARO, Judge: Norwest Corp. (Norwest) and Subsidiaries,
Successor in Interest to Davenport Bank and Trust Co. (DBTC) and
Subsidiaries, petitioned the Court to redetermine respondent's
determination of a $132,088 deficiency in DBTC's 1991
consolidated Federal income tax. Following petitioner's
concessions, the only issue left to decide is whether section
162(a) allows DBTC to deduct investigatory costs, due diligence
costs, and officers' salaries which respondent determined were
attributable to an acquisition of DBTC. We hold that DBTC may
not deduct any of these costs. Unless otherwise stated, section
references are to the Internal Revenue Code in effect for the
subject year. Rule references are to the Tax Court Rules of
Practice and Procedure. Dollar amounts are rounded to the
nearest dollar.
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