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Disallowed idemnity deduction blues.
From time to time, corporate officers and shareholders agree to indemnify their corporations for certain expenses and losses. The taxpayer would prefer to claim an ordinary loss deduction instead of a capital loss or, worse, a nondeductible payment. The Sixth Circuit Court of Appeals recently denied such a claim.
Isaac Tigrett II was in the business of developing and promoting restaurant and entertainment venues. After founding and building the Hard Rock Cafe chain, he developed the House of Blues concept. As CEO of HOB Entertainment Inc., Tigrett sought in 1996 to open a temporary House of Blues at the Olympic Games in Atlanta. The corporate board initially was not …
