Fedex Corp. v. United States
United States District Court for the Western District of Tennessee
291 F.Supp.2d 699 (2003)
FedEx Corporation (FedEx) (plaintiff) owned airplanes and maintained the engines in accordance with Federal Aviation Administration rules. Although engines could be sold separately, they were often purchased as part of the airplane. To be serviced, the engine had to be removed from the airplane. This service cost would typically range between 1 to 8 percent of the airplane’s value. FedEx reported the cost of maintaining the engines as deductible business expenses. The Internal Revenue Service determined that the maintenance should be capitalized instead, requiring FedEx to pay an additional $70 million in taxes. FedEx brought suit against the United States government (defendant) for a refund in the United States District Court for the Western District of Tennessee.
Rule of Law
Holding and Reasoning (Mays, J.)
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