Ash Grove Cement Co. has lost a $7.7 million appeal of its federal taxes. U.S. District Judge Carlos Murguia ruled Feb. 6 that the Overland Park, Kan.-based company could not deduct as business expenses about $15 million it paid to settle a shareholder lawsuit in 2005.
The ruling stemmed from a suit filed by a minority shareholder in 2002 against Ash Grove and its directors, arguing that the company’s acquisition in 2000 of Vinton Corp. and Lyman-Richey Corp. had diluted his and others’ minority stakes.
The Internal Revenue Service denied Ash Grove’s attempt to deduct the $15 million settlement and $43,345 in legal expenses. Murguia upheld the IRS decision that those were nondeductible capital expenses.