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(1996), the Court analyzed section 162(k) which, at the time,
prohibited deductions for amounts paid by a corporation “in
connection with the redemption of its stock”. The issue before
the Court was whether the costs incurred in obtaining debt
financing to complete a leveraged buyout that was treated as a
redemption were “in connection with” the corporation’s redemption
of its stock and therefore nondeductible under section 162(k).
Relying on Snow and Huntsman, we interpreted “in connection with”
broadly to mean “associated with, or related”. Id. at 352. We
confirmed our reading by consulting the legislative history of
section 162(k), which expressly stated that “in connection with”
was intended to be construed broadly. Id. at 353. In applying
the broad interpretation, we found that much of the evidence
referred to the debt financing as “necessary” to the transaction.
Id. at 352. In addition, the taxpayer’s payment of financing
costs, its receipt of the debt capital, and the redemption were
events in a continuum that culminated in the redemption. Id. at
353. Similarly to the Court of Appeals for the Eighth Circuit in
Huntsman, we found the financing costs were an “integral part” of
a detailed plan. Id. We concluded that the financing costs were
both a cause and effect of the leveraged buyout (the redemption).
Id.
The foregoing authorities obviously support a broad reading
of “in connection with”, but that is by no means a reading
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