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54 Ohio St. L.J. 1505 (1993)
An Analysis of INDOPCO, Inc. v. Commissioner

handle is hein.journals/ohslj54 and id is 1531 raw text is: An Analysis of INDOPCO, Inc. v. Commissioner On February 26, 1992 the Supreme Court of the United States decided what may one day prove to be the most often cited tax case, INDOPCO, Inc. v. Commissioner.1 The main issue involved a dispute between INDOPCO and the Commissioner of the Internal Revenue Service (Service) concerning the deductibility of banking and legal fees incurred with respect to a friendly takeover.2 Due to the broad language used by Justice Blackmun, the case has the potential3 to cause much controversy4 and litigation in areas that most thought to be closed chapters in the story of current deductibility of trade or business expenses under section 162(a) of the Internal Revenue Code (Code).5 This Comment first examines cases leading up to, and which may have been overruled by, INDOPCO.6 The Comment then outlines the facts of INDOPCO as well as its procedural and substantive holdings. Next, the Comment discusses the separate and distinct asset test, which INDOPCO correctly rejected. The Comment then discusses the future benefits holding of INDOPCO and its possible impact outside the friendly takeover arena. After discussing the possible impact of INDOPCO, the Comment discusses the proper test to apply when determining whether an expenditure should be currently deducted under section 162 or capitalized under section 263. In this respect, this Comment argues that courts should base their decisions on a distortion of income theory, while giving consideration to practical concerns. Finally, the Comment ends with recommendations as to how the Service should handle deductibility of certain expenses in the future. 1 112 S. Ct. 1039 (1992). INDOPCO, Inc. was formerly known as National Starch and Chemical Corp. (National Starch). 21d. 3 See Timothy J. McCormally, TEl Warns of IRS Agents Poised to Disallow Historically Deductible Expenditures, 55 TAx NoTEs 739, 739 (1992). 4 Recent controversy has developed concerning the deductibility of expenses incurred in removing asbestos. See infra notes 64-71 and accompanying text. 5 Some of these expenses include: advertising, employee training, repairs, and expansion costs. All section references contained herein are to the Internal Revenue Code of 1986, title 26 of the U.S. Code, unless otherwise indicated. 6 Some commentators argue that, due to the language used in INDOPCO and the facts of some of the previous cases, INDOPCO can possibly be distinguished. See, e.g., George B. Jarvas & Todd F. Maynes, Business Expansion and Protection in the Post INDOPCO World, 55 TAX NOTEs 971, 972-79 (1992).

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