Opinion ID: 441995
Heading Depth: 1
Heading Rank: 9

Heading: corn products applied to supermarkets stock.

Text: 84 We are satisfied that the findings of the district court in the instant case are sufficient to support its judgment. The court stated that, in applying the Corn Products doctrine, [t]he distinction to be made is whether the taxpayer is dealing with the asset as a capital asset or is it being held for some other purpose? 552 F.Supp. at 358. Although this statement is an inartful expression of the Corn Products test as we have outlined it, it is clear from the district court's opinion that the court determined that CTI purchased the stock for a business purpose, not an investment purpose. See 552 F.Supp. at 358 (original investment motive ... played no part in the consummation of the bargain); 552 F.Supp. at 359 (Plaintiff had only the single motive of wanting to preserve its goodwill). It is also clear that the district court reviewed all of the circumstances surrounding the Supermarkets deal and considered most of the factors that inform the inquiry into business or investment purpose. 51 85 The Government complains that there is no finding that the acquisition of Supermarkets stock was a necessary and integral act in CTI's business. As we have said, however, the degree of business need is but one factor in determining whether an asset falls within the Corn Products exception. The district court did not ignore altogether the necessity of carrying out the Supermarkets deal. 52 At any rate, we would not find such a failure fatal to the court's judgment. We employ many tests that require an examination of more than one factor. The essence of such tests is that the absence of one factor is not controlling if the existence of others dictates a given result. See, e.g., Byram, 705 F.2d at 1424 (specific factors, or combinations of them, are not necessarily controlling). Since the Government does not attack the district court's finding that CTI had a business purpose, we need not determine whether, assuming a low degree of business need, the record supports the court's conclusion. 53 86 Although we are not called upon to review the fact findings of the district court, we wish, because the Government has argued that application of Corn Products on these facts will greatly expand the doctrine, to note how narrow our holding actually is. First, we note what this case does not involve: this is not a case of a mixed motive or purpose; 54 the district court found that CTI had a single motive in purchasing the Supermarkets stock. 552 F.Supp. at 359. Nor is this a case where a taxpayer has, after an investment has gone sour, dreamed up a business purpose for the transaction, in order to obtain more favorable tax treatment; 55 the district court found that CTI knew, when the deal closed, that it was making what, from an investment point of view, was an imprudent purchase. Finally, this is not a case in which the taxpayer has entered into a transaction solely for its tax consequences; the district court found not the slightest suggestion that Supermarkets was motivated by the potential tax consequences of the deal. 552 F.Supp. at 357. 87 Rather, this is a case in which a taxpayer made a purchase it was not obligated to make, fully expecting to lose money on the deal, for the sole purpose of accomplishing an objective for which a direct expenditure would be deductible as an ordinary and necessary business expense. The parties have agreed that this case presents a question of first and last impression, 552 F.Supp. at 355; if ever a taxpayer makes such a purchase again, we see no reason to deny him ordinary loss treatment. 56 88 This is also a case in which the taxpayer's motivation changed during the course of the transaction. A change in purpose has been given effect when it favors the Government; we see no reason to deny it effect when it favors the taxpayer. See, e.g., Gulftex Drug, 79 T.C. at 121 (stock originally purchased to ensure source of supply, but held long after need for supply ended; held, purpose changed from business to investment). 89