Commissioner of Internal Revenue v. National Alfalfa Dehydrating & Milling Company

PETITIONER: Commissioner of Internal Revenue
RESPONDENT: National Alfalfa Dehydrating & Milling Company
LOCATION: North DeKalb Shopping Mall

DOCKET NO.: 73-9
DECIDED BY: Burger Court (1972-1975)
LOWER COURT: United States Court of Appeals for the Tenth Circuit

CITATION: 417 US 134 (1974)
ARGUED: Jan 14, 1974
DECIDED: May 28, 1974

ADVOCATES:
Charles White Hess - for respondent
Stuart A. Smith - for petitioner

Facts of the case

Question

Media for Commissioner of Internal Revenue v. National Alfalfa Dehydrating & Milling Company

Audio Transcription for Oral Argument - January 14, 1974 in Commissioner of Internal Revenue v. National Alfalfa Dehydrating & Milling Company

Audio Transcription for Opinion Announcement - May 28, 1974 in Commissioner of Internal Revenue v. National Alfalfa Dehydrating & Milling Company

Warren E. Burger:

The disposition of number 73-9, CIR against the National Alfalfa Dehydrating and Milling Company will be announced by Mr. Justice Blackmun.

Harry A. Blackmun:

Well, this is a tax case coming to us from the United States Court of Appeals for the Tenth Circuit.

We granted certiorari on the petition of the Commissioner of Internal Revenue because of an indicated conflict with decisions of the Court of Claims.

The corporate taxpayer in 1957 issued sinking fund debentures in exchange for its then outstanding cumulative preferred shares.

The issue is whether the taxpayer is entitled to claim an interest paid deduction from gross income on account of amortizable debt discount.

The taxpayer would measure that discount by the difference between the face amount of the debentures and its claimed value of the preferred shares at the time of the exchange.

The Commissioner disallowed the deduction and was upheld in this decision by the Tax Court.

The Court of Appeals, however, by divided vote reversed.

In an opinion filed today, we hold that the taxpayer did not incur amortizable debt discount upon the exchange of its debentures for its outstanding preferred.

The reasons are set forth in the opinion at some length and accordingly the judgment of the Court of Appeals is reversed.

Mr. Justice Stewart concurs in the judgment in parts one, two and three of the opinion that has been filed.

Warren E. Burger:

Thank you, Mr. Justice Blackmun.