United States v. Star-Kist Foods, Inc. (Formerly the French Sardine Company of California)

This controversy arises from the fact that Star-Kist Foods paid to the United States in settlement of an alleged OPA violation and claimed a deduction therefor as an ordinary and necessary business expense under Section 23(a) (1) (A) of the Internal Revenue Code, 26 U.S.C.A. § 23 (a) (1) (A). The deduction was disallowed and the amount of the diff erence collected. Star-Kist brought suit against the United States. The trial court found under the facts in the record that the amount was deductible and granted judgment for Star-Kist.

The facts found by the trial court are summarized below.

Since incorporation in 1917, Star-Kist has been engaged in the fish cannery business. It purchases raw fish by the ton from fishermen, cans the proper portions thereof and sells the canned product through brokers to its customers. The latter resell the cans of fish to consumers at retail.

The Office of Price Administration in 1942 issued a regulation which fixed the price at which fish canners could sell tuna at the same price at which each had sold this product during the month of March, 1942. However, Star-Kist had not sold fancy light meat tuna during that month. Under this regulation,…