Frank Lyon Co. v. United States
United States Supreme Court
435 U.S. 561 (1978)
The Frank Lyon Company (Lyon) (plaintiff), a retailer, agreed to a sale-and-leaseback transaction with the Worthen Bank & Trust Company (Worthen) and the New York Life Insurance Company (NYL). Worthen was to sell the building to Lyon, and Lyon was to lease back the building to Worthen long term. The transaction was designed to help Worthen overcome regulatory and financial obstacles to the construction of a new building. Lyon’s participation was motivated primarily by its interest in diversifying its business. Lyon expected that Worthen would eventually exercise a leaseback option to repurchase the building after several years. After state and federal regulators approved the transaction, Lyon mortgaged the building to NYL in return for NYL’s loan of most of the money needed to complete the building’s construction. If Worthen’s leaseback payments stopped, Lyon would remain the sole party legally responsible for repaying NYL’s loan. The parties did not indicate any desire or intent to gain special tax benefits from the transaction. Lyon claimed federal tax deductions for its mortgage payments and building depreciation. The commissioner of internal revenue (commissioner) determined that Lyon did not own the building for tax purposes, and disallowed the deductions. Lyon filed suit against the United States government (defendant) in federal district court, seeking a refund. The district court ruled for Lyon. The United States Court of Appeals for the Eighth Circuit reversed in the commissioner’s favor. The United States Supreme Court granted certiorari.
Rule of Law
Holding and Reasoning (Blackmun, J.)
Dissent (Stevens, J.)
What to do next…
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 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
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. Read more about Quimbee.
Here's why 174,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 14,000 briefs, keyed to 188 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.