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ordinary and necessary expenses deductible under
section 162, we think it has been sapped of any
remaining vitality by the Supreme Court’s Woodward,
Hilton Hotels, and Arkansas Best line of cases. * * *
[Frederick Weisman Co. v. Commissioner, supra at 573.]
We noted that various other courts, including the Court of
Appeals for the Fifth Circuit itself, had severely limited the
application of Five Star Manufacturing Co. v. Commissioner,
355 F.2d 724 (5th Cir. 1966), insofar as that case had allowed a
corporation to deduct an otherwise capital expenditure if the
survival of the corporate business were at stake. See Markham &
Brown, Inc. v. United States, 648 F.2d 1043, 1045 (5th Cir.
1981); Richmond, Fredericksburg & Potomac R.R. Co. v.
Commissioner, 528 F.2d 917, 920 (4th Cir. 1975) (need to show
“dire necessity”), affg. 62 T.C. 174 (1974); Jim Walter Corp. v.
United States, 498 F.2d 631, 639 (5th Cir. 1974) (Five Star
“limited to situations where a payment to purchase a capital
asset, though capital in nature, is necessary to the taxpayer’s
survival.”); H. & G. Indus., Inc. v. Commissioner, 495 F.2d 653,
657 (3d Cir. 1974), affg. 60 T.C. 163 (1973); Stokely-Van Camp,
Inc. v. United States, 21 Cl. Ct. 731, 754 (1990).4 In Frederick
Weisman Co. v. Commissioner, supra at 572, we observed:
4 Even if we were to assume that Five Star Manufacturing Co.
v. Commissioner, 355 F.2d 724 (5th Cir. 1966), revg. 40 T.C. 379
(1963), is still good law, petitioner makes no argument or
showing that the stock redemption was indispensable to Chrysler’s
survival so as to invoke the exception of that case.
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