Illinois Tool Works, Inc. & Subsidiaries - Page 2

                                        - 2 -                                         

               COHEN, Judge:  Respondent determined deficiencies of                   
          $2,370,750 and $818,812, respectively, in petitioner’s                      
          consolidated Federal income tax for 1992 and 1993.                          
               After concessions, the issue for decision is whether                   
          $6,956,590 of a payment made by petitioner in satisfaction of a             
          court judgment, based on a patent infringement claim that was               
          brought against the acquired corporation and assumed as a                   
          contingent liability by petitioner, should be capitalized as a              
          cost of acquisition or deducted as a business expense.  Unless              
          otherwise indicated, all section references are to the Internal             
          Revenue Code in effect for the years in issue, and all Rule                 
          references are to the Tax Court Rules of Practice and Procedure.            
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated, and the stipulated             
          facts are incorporated in our findings by this reference.                   
          Illinois Tool Works, Inc. (petitioner) is a corporation organized           
          and existing under the laws of the State of Delaware.  At the               
          time of the filing of the petition, petitioner’s principal place            
          of business was located in Glenview, Illinois.  During 1992,                
          petitioner and its subsidiaries filed a consolidated Federal                
          income tax return, reported income on a calendar year basis, and            
          used the accrual method of accounting.                                      
               In 1975, the DeVilbiss Co. (DeVilbiss) was a division of               
          Champion Spark Plug Co. (Champion).  On October 9, 1975,                    

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  Next

Last modified: May 25, 2011