Kopp’s Company, Inc. v. United States
United States Court of Appeals for the Fourth Circuit
636 F.2d 59 (1980)
Kopp’s Company, Inc. (the company) (plaintiff) was a lumber and building-supply company owned by Earl and Jean Kopp. The Kopps had a son, Wayne, who was in the military. While on leave from the military, Wayne, who had a checkered driving history, had permission to use a car owned by the company. Wayne got in a car accident that left the other driver, Warren Danner, a quadriplegic. The company had car insurance, but Wayne did not. Wayne also had no assets, and Earl had limited assets outside of the company. Danner filed a lawsuit against the company and all three Kopps, alleging damages of over $4 million. As a result, the company suffered financially. The company’s lawyer warned that it would probably be found guilty of negligent entrustment of the car to Wayne due to his driving record. The company settled the case with Danner, offering to pay $50,000 and incurring over $3,000 in legal fees. The company deducted the settlement and legal fees from its income taxes for the year, classifying the expenditures as business expenses. The Internal Revenue Service (the IRS) (defendant) disallowed the deduction and assessed a deficiency. The Kopps paid the deficiency and sued the IRS for a refund. The district court held that the expenditures were not business expenses because the company was not the origin of the claim. Rather, Wayne’s actions were the origin of the claim, and the company was only involved as a consequence of those actions. The company appealed.
Rule of Law
Holding and Reasoning (Bryan, J.)
Dissent (Ervin, 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 709,000 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
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 709,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,500 briefs, keyed to 983 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.