Eighth Circuit Again Rejects Nestle Bid to Write Off ESOP Distributions

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Nestle Purina Petcare Co. cannot deduct from its taxes more than $9 million in cash distribution dividends it paid when redeeming stock held in an employee stock ownership plan, the U.S. Court of Appeals for the Eighth Circuit rules. The ruling affirms a U.S. Tax Court opinion that declined to follow the Ninth Circuit's precedent. The Tax Court found that Section 162(k) renders payments that Ralston Purina Co.—now known as Nestle Purina Petcare Co.—made to its ESOP in redemption of preferred stock for terminating employees nondeductible under Section 404(k). 

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