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Arkansas Best Corporation v. Commissioner

United States Supreme Court
485 U.S. 212 (1988)


Facts

Arkansas Best Corporation (Best) (plaintiff) was the majority owner of the National Bank of Commerce (National). When National struggled financially, Best bailed out National by purchasing stock to keep National afloat. Best sold its stock at a loss and claimed an ordinary-loss deduction on its federal tax returns. However, the federal tax commissioner (commissioner) (defendant) determined that Best’s stock losses were capital losses, not ordinary losses, and disallowed the deduction. Best petitioned the United States Tax Court for a redetermination. The tax court concluded that Best’s stock purchases were aimed at saving National from failure and thus served a business purpose. Accordingly, the tax court entered judgment in favor of Best. The commissioner appealed to the United States Court of Appeals for the Eighth Circuit, which reversed the tax court’s decision. The United States Supreme Court granted certiorari.

Rule of Law

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Issue

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Holding and Reasoning (Powell, J.)

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  • A "yes" or "no" answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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