Compaq Computer Corp. v. Commissioner

Compaq Computer Corp. v. Commissioner is a case about tax deductions related to stock options. Compaq claimed large tax deductions for a certain employee stock option plan, arguing it was a valid expense. The IRS disagreed, asserting that the deductions were not allowable under tax law. The court examined the nature of these deductions, focusing on whether the stock options could be classified as compensation. Ultimately, the court's decision clarified the rules around how companies can deduct expenses for stock options, impacting how businesses account for executive compensation in their taxes.