Commissioner V. Lincoln Savings & Loan Assn. - 403 U.S. 345 (1971) Essay

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U.S. Supreme Court Commissioner v. Lincoln Savings & Loan Assn., 403 U.S. 345 (1971) Commissioner of Internal Revenue v. Lincoln Savings & Loan Assn. No. 544 Argued February 23, 1971 Decided June 14, 1971 403 U.S. 345 CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT Syllabus Payment by a state-chartered savings and loan association of the "additional premium" required by § 404(d) of the National Housing Act to be paid to the Federal Savings and Loan Insurance Corp. is not deductible for income tax purposes as an ordinary and necessary business expense under § 162(a) of the Internal Revenue Code. Pp. 403 U. S. 352-359 422 F.2d 90, reversed. BLACKMUN, J., delivered the opinion of the Court, in which BURGER, C.J., and BLACK, HARLAN, BRENNAN, STEWART, WHITE, and MARSHALL, JJ., joined. DOUGLAS, J., filed a dissenting opinion, post, p. 403 U. S. 359. MR. JUSTICE BLACKMUN delivered the opinion of the Court. This case presents the question whether the "additional premium" paid in 1963 by a state-chartered savings and loan association to the Federal Savings and Loan Insurance Corporation under the compulsion of § 404(d) of the National Housing Act, as amended, 12 U.S.C. Page 403 U. S. 346 § 1727(d), [Footnote 1] is deductible by the association, for income tax purposes, as an ordinary and necessary business expense under § 162(a) of the Internal Revenue Code of 1954, 26 U.S.C. § 162(a). The Commissioner of Internal Revenue determined a deficiency of $461,454.38 in the 1963 cash basis federal income tax of Lincoln Savings and Loan Association. Nearly all the deficiency was attributable to the disallowance of a deduction claimed for Lincoln's payment of $882,636.86 made pursuant to § 404(d). Lincoln sought redetermination in the Tax Court. Judge Raum, in a decision reviewed by the court without dissent, upheld the deficiency. 51 T.C. 82

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