- 2 -
Held: P’s legal fees incurred in defending
against the State’s antitrust suit arose out of, and
were incurred in connection with, P’s acquisition of
LS. The origin of the State’s antitrust claim was P’s
acquisition of LS. P’s legal fees must be capitalized.
Fredrick J. Gerhart, Kevin M. Johnson, and Thomas Edward
Doran, for petitioner.
Mark H. Howard, for respondent.
OPINION
RUWE, Judge: Respondent determined deficiencies of
$7,963,850 and $1,773,964 in petitioner’s Federal income tax for
its taxable years ending January 28, 1989, and February 3, 1990,
respectively (hereinafter referred to as the 1989 and 1990 tax
years). After concessions, the only issue for decision is
whether petitioner may deduct or must capitalize legal fees and
costs (legal fees) incurred in defending an antitrust suit
brought by the State of California subsequent to petitioner’s
acquisition of Lucky Stores, Inc. This case is before the Court
fully stipulated. See Rule 122. The stipulation of facts and
the attached exhibits are incorporated herein by this reference.
Background
Petitioner is an affiliated group of corporations which
annually files a consolidated Federal income tax return.
American Stores Company (American Stores) is the common parent of
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