Hershey Foods Corporation v. Commissioner of Internal Revenue

76 T.C. 312 (1981)

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Hershey Foods Corporation v. Commissioner of Internal Revenue

United States Tax Court
76 T.C. 312 (1981)

Facts

Hershey Foods Corporation (Hershey) (plaintiff) lost money on a Canadian-based branch for several years. Hershey planned to transfer the Canadian-based branch to another company and thereby sought to benefit from a favorable provision of Internal Revenue Code § 367. Hershey requested a determination from the Internal Revenue Service (IRS) (defendant) that would allow Hershey to claim tax benefits resulting from the transfer of the Canadian-based branch. The IRS declined to issue a ruling in favor of Hershey unless Hershey agreed to include prior losses from the Canadian-based branch as income on the grounds that Hershey’s transfer of the Canadian-based branch raised the suspicion that Hershey was trying to avoid paying taxes on the future income that Hershey stood to gain once the Canadian-based branch became profitable after the transfer. Hershey filed suit, seeking judicial review of the IRS’s determination.

Rule of Law

Issue

Holding and Reasoning (Fay, J.)

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