Deputy v. du Pont

308 U.S. 488 (1940)

From our private database of 46,100+ case briefs, written and edited by humans—never with AI.

Deputy v. du Pont

United States Supreme Court
308 U.S. 488 (1940)

Facts

Dupont Corporation (the corporation) decided to sell stock to some of its executives to increase the executives’ efficiency to the corporation’s benefit. After the corporation learned that it could not legally furnish the stock to the executives, Pierre du Pont (plaintiff) borrowed shares of the corporation’s stock and sold the shares to the executives at a discount. Du Pont was not otherwise involved in the business of trading securities or assisting other corporations in furnishing stock for their executives. Du Pont promised to return a certain number of shares to the corporation within 10 years but was unable to do so. Instead, du Pont paid the corporation the cash value of the shares, an amount equal to the dividends that the executives’ shares had earned over the loan period, and the federal tax that the corporation was required to pay on du Pont’s payment. Du Pont then deducted the total amount of his payment to the corporation on his income taxes, claiming that the payment was an ordinary and necessary business expense. The Commissioner of Internal Revenue (the commissioner) disallowed the deduction and determined a deficiency in du Pont’s income taxes. Du Pont paid the taxes as recalculated by the commissioner and then sued the United States (defendant) in federal district court to recover the amount paid. The district court ruled against du Pont, reasoning that although du Pont was engaged in the business of conserving and enhancing his estate, the payment to the corporation was an extraordinary, highly uncommon expense, rather than an ordinary expense. A federal appellate court reversed the district court’s decision, and the United States Supreme Court granted certiorari to determine whether the appellate court’s decision was consistent with prior Supreme Court precedent regarding appropriate deductions for ordinary and necessary business expenses.

Rule of Law

Issue

Holding and Reasoning (Douglas, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 748,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.

    Unlock this case briefRead our student testimonials
  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.

    Learn about our approachRead more about Quimbee

Here's why 748,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 46,100 briefs, keyed to 987 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 748,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 46,100 briefs - keyed to 987 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership