80
Opinion of the Court
Richard J. Hiegel argued the cause for petitioner. With him on the briefs were Geoffrey R. S. Brown, Rory O. Mill-son, and Richard H. Walker.
Kent L. Jones argued the cause for respondent. With him on the brief were Solicitor General Starr, Assistant Attorney General Peterson, Deputy Solicitor General Wallace, Gilbert S. Rothenberg, and Bruce R. Ellisen.*
Justice Blackmun delivered the opinion of the Court.
In this case we must decide whether certain professional expenses incurred by a target corporation in the course of a friendly takeover are deductible by that corporation as "ordinary and necessary" business expenses under § 162(a) of the Internal Revenue Code.
I
Most of the relevant facts are stipulated. See App. 12, 149. Petitioner INDOPCO, Inc., formerly named National Starch and Chemical Corporation and hereinafter referred to as National Starch, is a Delaware corporation that manufactures and sells adhesives, starches, and specialty chemical products. In October 1977, representatives of Unilever United States, Inc., also a Delaware corporation (Unilever),1 expressed interest in acquiring National Starch, which was one of its suppliers, through a friendly transaction. National Starch at the time had outstanding over 6,563,000 common shares held by approximately 3,700 shareholders. The stock was listed on the New York Stock Exchange. Frank and Anna Greenwall were the corporation's largest shareholders and owned approximately 14.5% of the common. The Greenwalls, getting along in years and concerned about
*Timothy J. McCormally and Mary L. Fahey filed a brief for the Tax Executives Institute, Inc., as amicus curiae urging reversal.
1 Unilever is a holding company. Its then principal subsidiaries were Lever Brothers Co. and Thomas J. Lipton, Inc.
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