U.S. Court of Appeals for the Third Circuit, 1970

George L. Schultz and Margaret F. Schultz v. Commissioner of Internal Revenue

U.S. Court of Appeals for the Third Circuit · Decided January 9, 1970 · Kalodner, Staley, Freedman

420 F.2d 490; 25 A.F.T.R.2d (RIA) 391; 1970 U.S. App. LEXIS 11268 (Federal Reporter, Second Series)

Counsel

John P. Lipscomb, Lee, Toomey & Kent, Washington, D. C. (Thomas E. Jenks, Washington, D. C., Myles A. Cane, New York City, on the brief), for appellants., William L. Goldman, U. S. Dept, of Justice, Tax Division, Washington, D. C. (Johnnie M. Walters, Asst. Atty. Gen., Lee A. Jackson, Meyer Rothwacks, Lester B. Snyder, Attys., Dept, of Justice, Washington, D. C., on the brief), for ap-pellee.

Cases that cite this one

14 later published cases cite this decision. The 13 that cite it most often are listed here.

Van Pickerill & Sons, Incorporated v. United States (7th Cir. 1971)
Merians v. Commissioner (United States Tax Court 1973)
Gordon v. Commissioner (United States Tax Court 1985)
Epp v. Commissioner (United States Tax Court 1982)
Estate of Davis v. Commissioner (United States Tax Court 1982)
Luman v. Commissioner (United States Tax Court 1982)
B. Forman Co. v. Commissioner (United States Tax Court 1970)
George v. Zmuda and Walburga Zmuda v. Commissioner of Internal Revenue (9th Cir. 1984)
Childers Distributing Co. v. Commissioner (United States Tax Court 1983)
STATE OF TENNESSEE EX REL. DAVIS v. Market Street News (District Court, E.D. Tennessee 1973)
Heaven Hill Distilleries, Inc. v. United States (Court of Claims 1973)
B. Forman Co. v. Commissioner (2d Cir. 1972)
B. Forman Co. v. Commissioner (United States Tax Court 1970)

This list shows which later cases cite this one. It does not say how they treated it, and no review of that has been done. Not a substitute for Shepard’s or KeyCite — verify before relying.

Opinion

OPINION OF THE COURT

PER CURIAM.

On this appeal the appellant taxpayers challenge the Tax Court’s Decision that their four year pre-payment of storage charges, insurance premiums and state ad valorem taxes, in conjunction with their non-business purchase of substantial quantities of bulk whiskey, were not deductible as ordinary and necessary expenses under Section 212(2) of the 1954 Internal Revenue Code, but instead should be added to the cost of the whiskey.

The distinction between an ordinary expense and a capital expenditure in this field is based on a factual analysis of the relationship of the expenses to the entire transaction. Although storage charges, insurance premiums, and property taxes are normally deductible as ordinary expenses, they are not deductible where they are incurred as an integal part of a capital transaction. The Tax Court’s determination that the pre-payments here made were incurred as part of a capital transaction is essentially a factual determination.

On review of the record we cannot say that the factual determination made by the Tax Court is “clearly erroneous”, and accordingly its Decision will be affirmed.

Case-law data current through December 31, 2025. Source: CourtListener bulk data.