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Important Court Cases

Lucky Stores, Inc. and Subs v. Commissioner 105 T.C. No 28 (1995)

Decision relating to the valuation of bread contributed to charitable organization. Many taxpayers will cite this as authority for their valuation of contributed inventory. Unless the fact pattern is similar to the facts in the case, the decision will not be relevant.

RJR Nabisco Inc., et al., v. Commissioner, T.C. Memo 1998-252

Decision relating to package design costs. This decision states that package design costs are a form of advertising and as such are currently deductible.

Jefferson Pilot Corp v. Commissioner 98 T.C. 435 (1992), affd. 995 F2d 530 (4th Cir. 1993)

The court determined that a license is a franchise as defined in IRC Section 1253(b)(1). The courts looked to the legislative history of IRC Section 1253 and found that it does not limit the application of IRC Section 1253 to private commercial franchises. Previously, the IRS held the position that a liquor license had an indeterminate life and therefore costs were not recoverable through depreciation or amortization. As a result of the decision in this case, taxpayers can amortize the cost of their liquor license. See also Tele-Communications Inc. (TCI) v. Commissioner 95 T.C. 495 (1990) affd. 12F3d 1005 (10th Cir. 1993).

Fox Photo, T.C. Memo 1990-348

This decision allowed a small structure to be treated as 5-year property for depreciation purposes.

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Page Last Reviewed or Updated: 16-Apr-2014