Baldwin Haspel Burke & Mayer LLC

Otto Candies, LLC v. United States of America


May 28, 2003 – This was the culmination of more than ten years of work defending a corporate client from a tax assessment by the Internal Revenue Service. The case involved an assertion by the IRS that the company was subject to accumulated earnings taxes, as well as related penalties and interest. The Federal District Court held that: (1) capital accumulations for fleet replacement, project funding, working capital, and shareholder redemption in accordance with stock redemption agreements constituted reasonably anticipated needs of the business, and therefore were not subject to accumulated earnings tax, and (2) evidence established that tax avoidance was not a motive for taxpayers’ capital accumulations. In a nearly seventy-five page opinion, the court adopted nearly every argument made on behalf of our client.


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