Question

FICA stands for Fact, Issue, Conclusion, and Analysis and allows you to concisely summarize the conclusions of a court case. summarize a case. follow these steps:

•        State the facts of the case in a clear and concise matter
•        Identify the issue(s)/laws at hand
•        State the conclusion of the court
•        Analysis of the findings as presented in the case (answer the question: "why did the court rule this way on this issue?")

Court Cases:

Comm'r v. Indianapolis Power & Light Co., 493 US 203.

Comm'r v. Lincoln Electric Co., 176 F.2d 815

Comm'r v. Sullivan, 356 US 27.

Geoffrey, Inc. v. South Carolina Tax Commission, S.C. Sup. Ct., 313 S.C.

Gregory v. Helvering, 293 US 465.

Indopco v. Comm'r, 503 U.S. 79.

Kerns v. Comm'r, T.C. Memo 2004-63.

Lanco, Inc. v. Director, Division of Taxation, NJ Sup. Ct., Dkt. No. A-89-05.

Northwestern Cement Co. v. Minnesota, 358 US 450.

Quail Corporation v. North Dakota, 504 US 298.

Renkemeyer, Campbell, & Weaver LLP v. Comm'r, 136 T.C. 137.

Retief Goosen v. Comm'r, 136 T.C. No. 27.

Scripto, Inc. v. Carson, Sherriff, et al., 362 US 207.

Tax Comm'r of West Virginia v. MBNA America Bank, 640 SE 2d 226.

U.S. v. Boulware, 558 F.3d 971.

U.S. v. Davis, 397 US 301.

Welch v. Helvering, 290 US 111.

Wisconsin Dept. of Revenue v. William Wrigley, Jr. Co., 505 US 214.

Answer 1

1. Comm'r v. Indianapolis Power & Light Co:

Facts:

The company IPL used to accept deposits for assuring payments of electric bills in future.

The customers were eligible to claim refund either in cash or by checks. But this refund policy is applicable before the expiry of service period.

Customers also had this option of to set off the deposit amount against the bills.

After seven years, any deposits which are not claimed would go to the state.

The company IPL was not treating these receipts as income for taxation purposes.

Tax deficiency was found in audit and company appealed the same assessment.

Issue:

Whether the deposits are advances for electricity bill payments or there is no need to treat the same as income because of refund policy?

Conclusion:

No tax deficiency found and the case held in the favor of IPL.

Analysis:

The company was not directly holding the benefits of deposits as revenue as there was provision of refund or setting off the deposit amounts. In the absence of rights over the moneys, the figures do not hold definition of advances. Hence the same was not chargeable to tax.

2. Comm'r v. Lincoln Electric Co:

Facts:

The company LEC used to expense certain amounts on employee retirement benefits and also it deposited certain moneys in a trust for the benefit of employees.

These payments were deductible for the purpose of income tax.

The taxation authorities found tax deficiency based on the fact that such sum is not normally expended by the entities.

Issue:

Was the expenses were deductible or worth rejection being not reasonable?

Conclusion:

Order of the tax court was held to be in error that the payments were not necessary and ordinary. Case concluded to be in the favor of company LEC.

Analysis:

The deduction so allowable comprised of compensation for the services which was actually availed of. Since the contention of court proved to be in error, the company won the case.

3. Comm'r v. Sullivan:

Facts:

The taxpayer’s income was found to be illegal, the work done by employees was violating the law and also the rent payment for use of premises was also illegal.

Taxation authorities did not provide deductions for such expenses in calculating the income.

Issue:

Are the expenses for earning illegal income is deductible or not?

Conclusion:

Expenses are held non-deductible.

Analysis:

The taxability was held to be done on gross basis as the allowance of expenses is not to avoid the violation of law.

4. Geoffrey, Inc. v. South Carolina Tax Commission

Facts:

Geoffrey Inc. gave trademark rights to its holding company against a royalty as per agreement of one percent of its net sales.

For South Carolina business of the holding company, the tax authorities demanded tax on the royalty income from Geoffrey.

Issue:

Was Geoffrey’s claim is attainable that it did not purposefully directed the activities in the state.

Conclusion:

Royalty income of Geoffrey was held to be taxable.

Analysis:

Geoffrey has received benefits from the South Carolina borders in terms of royalty pursuant to its royalty agreement. Intention of the taxpayer will not alter the shared income of state which has to be taxable in the hands of person benefited.