Woods Investment Co. v. Commissioner
United States Tax Court
85 T.C. 274 (1985)
- Written by Kelli Lanski, JD
Facts
Woods Investment Co. (Woods) (plaintiff) sold all of its stock in four wholly owned subsidiaries, reporting a capital gain. Woods filed consolidated returns in the years leading up to the stock sale in which the subsidiaries depreciated their business property in accordance with accelerated methods allowed by the Internal Revenue Service (IRS) during those years. After the stock sale, the commissioner of the IRS (commissioner) (defendant) found that Woods’s tax returns were deficient because Woods’s basis in the subsidiaries’ stock was less than Woods claimed. Woods claimed that its deductions were correct under both I.R.C. § 312(k), which permitted the method of depreciation analysis Woods conducted in its return, and another regulation promulgated by the commissioner. The commissioner argued that applying both § 312(k) and the regulation allowed Woods to recognize a double deduction, which should not be permitted. Woods sought review of the commissioner’s decision by the United States Tax Court.
Rule of Law
Issue
Holding and Reasoning (Fay, J.)
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