- 8 -
way of the tax deductions claimed for the same shares when
contributed to the ESOT. The approximate $328 million deduction
was not taken for financial accounting purposes. For those
purposes, Chrysler reported the redemption as a purchase of
treasury stock.
Discussion
We must decide whether Chrysler may deduct the costs
(redemption price and related expenses) which it incurred to
redeem its common stock upon termination of the ESOP. Respondent
moves the Court to decide this issue by way of partial summary
judgment, arguing that a firmly established body of law holds
that a corporation may not deduct the costs which it incurs to
redeem its stock. Petitioner objects to respondent’s motion.
Petitioner asserts that it may deduct its costs as personal
service compensation or, alternatively, as a financing expense.
Petitioner argues as to its primary assertion that material facts
are still in dispute which will establish that Chrysler redeemed
its common stock from the ESOT intending to compensate the
employees for their personal services. Petitioner argues as to
its alternative assertion that material facts are still in
dispute which will establish that it redeemed its common stock
from the ESOT as a financing expense.
Summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials of phantom factual issues.
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