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Capitalizing The Target's Transaction Costs In Hostile Takeovers, David J. Roberts
Capitalizing The Target's Transaction Costs In Hostile Takeovers, David J. Roberts
Washington Law Review
In A.E. Staley Manufacturing Co. v. Commissioner, the Court of Appeals for the Seventh Circuit held that costs a corporation incurred to resist a hostile takeover were analogous to costs incurred to defend a business against attack and thus qualified as ordinary and necessary business expenses deductible under Internal Revenue Code section 162. Alternatively, the court held that those costs associated with abandoned capital transactions qualified for loss deductions under section 165. This Note argues that although the court reached approximately the right result in this case, its primary reliance on a defense of business rationale for deductibility under …