CitationIndopco, Inc. v. Comm’r, 503 U.S. 79, 112 S. Ct. 1039, 117 L. Ed. 2d 226, 1992 U.S. LEXIS 1374, 60 U.S.L.W. 4173, 92-1 U.S. Tax Cas. (CCH) P50,113, 69 A.F.T.R.2d (RIA) 694, 92 Cal. Daily Op. Service 1598, 92 Daily Journal DAR 2556, 6 Fla. L. Weekly Fed. S 31 (U.S. Feb. 26, 1992) Brief Fact Summary. Taxpayer was involved in a friendly take over with another company. As part of the acquisition, Taxpayer spent millions of dollars in fees and expenses for the takeover to occur. Synopsis of Rule of Law. A taxpayer may deduct all the ordinary and necessary business expenses paid or ...
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Morton Frank v. Commission
CitationFrank v. Commissioner, 20 T.C. 511, 1953 U.S. Tax Ct. LEXIS 128 (T.C. 1953) Brief Fact Summary. Petitioners incurred travel and legal expenses in pursuing their goal of owning and operating a newspaper. They attempted to deducted these expenses as business expenses. Synopsis of Rule of Law. Ordinary and necessary expenses incurred in connection with a trade or business may be deducted. ...
Exacto Spring Corporation v. Commissioner
CitationExacto Spring Corp. v. Comm’r, 196 F.3d 833, 1999 U.S. App. LEXIS 29988, 99-2 U.S. Tax Cas. (CCH) P50,964, 84 A.F.T.R.2d (RIA) 6977, 23 Employee Benefits Cas. (BNA) 2288 (7th Cir. Nov. 16, 1999) Brief Fact Summary. William Heitz was the cofounder, chief executive officer, and principal owner of the Exacto Spring Corporation. The corporation paid him $1.3 million and $1.0 million for tax years 1993 and 1994 as compensation. The corporation sought to deduct this from its income. Synopsis of Rule of Law. A business may deduct from its income ordinary and necessary business expe ...
Borge v. Commissioner
CitationBorge v. Comm’r, 405 F.2d 673, 1968 U.S. App. LEXIS 4452, 69-1 U.S. Tax Cas. (CCH) P9131, 23 A.F.T.R.2d (RIA) 320 (2d Cir. Dec. 17, 1968) Brief Fact Summary. Petitioner was an entertainer and owned a poultry business. He transferred the poultry business to a corporation he wholly owned. He and the corporation agreed to an arrangement wherein his entertainment income could offset losses of the corporation. Synopsis of Rule of Law. Gross income may be apportioned among organizations, trades or businesses if necessary to reflect income or prevent tax evasion if they are owned o ...
Welch v. Helvering
CitationWelch v. Helvering, 290 U.S. 111, 54 S. Ct. 8, 78 L. Ed. 212, 1933 U.S. LEXIS 1024, 3 U.S. Tax Cas. (CCH) P1164, 12 A.F.T.R. (P-H) 1456, 1933-2 C.B. 112, 1934 P.H. P307 (U.S. Nov. 6, 1933) Brief Fact Summary. Petitioner worked for a company that went bankrupt. After receiving a job with another company he decided to pay off debts of the bankrupt company to extent that he was able in order to repair his credit and standing. Synopsis of Rule of Law. In computing net income one may deduct ordinary and necessary expenses incurring in carrying on any trade or business. ...
Midland Empire Packing Co. v. Commissioner
CitationMidland Empire Packing Co. v. Commissioner, 14 T.C. 635, 1950 U.S. Tax Ct. LEXIS 221 (T.C. 1950) Brief Fact Summary. Petitioner owned a meat packing plant. Oil began seeping into the basement rooms and Petitioner was forced to spend money to stop the seepage in order to keep the business operating. Synopsis of Rule of Law. An “ordinary” business expense does not mean that the expense has to be habitual or normal for the same taxpayer. ...
Johnson v. Commissioner
CitationJohnson v. Commissioner, 78 T.C. 882, 1982 U.S. Tax Ct. LEXIS 91, 78 T.C. No. 62 (T.C. June 7, 1982) Brief Fact Summary. Petitioner was a professional basketball player. He had a contractual relationship to pay his salary to another corporation, who in turn paid him. Synopsis of Rule of Law. Income must be taxed to the one who earns it. ...
Overton v. Commissioner
CitationOverton v. Commissioner, 162 F.2d 155, 1947 U.S. App. LEXIS 3372, 47-1 U.S. Tax Cas. (CCH) P9292, 47-1 U.S. Tax Cas. (CCH) P10,564, 35 A.F.T.R. (P-H) 1427, 1947 P.H. P72,492 (2d Cir. June 13, 1947) Brief Fact Summary. Petitioners gave a certain amount of stock to their wives. Through a complex transaction, stock was converted which allowed Petitioners’ wives to receive dividends from a certain class of stock. Synopsis of Rule of Law. Anticipatory assignments cannot be used to avoid income ordinarily taxable to the taxpayer. ...
Morrill v. United States
CitationMorrill v. United States, 228 F. Supp. 734, 1964 U.S. Dist. LEXIS 8752, 64-1 U.S. Tax Cas. (CCH) P9463, 13 A.F.T.R.2d (RIA) 1334 (D. Me. Apr. 27, 1964) Brief Fact Summary. Petitioner established a trust for his four minor children. The income was used to pay a portion of the children’s tuition to universities they attended. Petitioner had the discretion over the trust to direct these payments. Synopsis of Rule of Law. The grantor of a trust may be treated as the owner of any portion of the trust when the grantor has discretion to distribute to the grantor or the grantor̵ ...
Helvering v. Clifford
CitationHelvering v. Clifford, 309 U.S. 331, 60 S. Ct. 554, 84 L. Ed. 788, 1940 U.S. LEXIS 1252, 40-1 U.S. Tax Cas. (CCH) P9265, 23 A.F.T.R. (P-H) 1077, 1940-1 C.B. 105, 1940 P.H. P62,021 (U.S. Feb. 26, 1940) Brief Fact Summary. Respondent created a trust for the benefit of his wife and family. He maintained control of the corpus of the trust but did not claim it as income on his return. Synopsis of Rule of Law. Gross income includes all gains, profits, and income derived from whatever source including interest income arising from ownership of property. ...
Commissioner v. Culbertson
CitationComm’r v. Culbertson, 337 U.S. 733, 69 S. Ct. 1210, 93 L. Ed. 1659, 1949 U.S. LEXIS 3078, 49-1 U.S. Tax Cas. (CCH) P9323, 37 A.F.T.R. (P-H) 1391, 1949-2 C.B. 5, 1949 P.H. P72,012 (U.S. June 27, 1949) Brief Fact Summary. Respondent was an elderly rancher who wanted to sell his cattle business. He entered into a partnership arrangement where his four sons bought a portion of the heard. There was an issue of who the ranch income should be attributed to because the sons did not contribute much in the way of capital or services to the partnership. Synopsis of Rule of Law. Income m ...
Estate of Stranahan v. Commissioner
CitationEstate of Stranahan v. Commissioner, 472 F.2d 867, 1973 U.S. App. LEXIS 11874, 73-1 U.S. Tax Cas. (CCH) P9203, 31 A.F.T.R.2d (RIA) 710 (6th Cir. Feb. 2, 1973) Brief Fact Summary. Decedent paid a large interest penalty to the I.R.S. In order to make full use of the deduction available for the interest penalty paid, he assigned rights to dividends to his son and received income of $115,000 for the assignment. Synopsis of Rule of Law. A taxpayer may not avoid taxation by legally assigning or giving away a portion of income derived from income producing property that the taxpayer retai ...
Salvatore v. Commissioner
CitationSalvatore v. Commissioner, 1970 Tax Ct. Memo LEXIS 331, T.C. Memo 1970-30, 29 T.C.M. (CCH) 89, T.C.M. (RIA) 70030 (T.C. Feb. 4, 1970) Brief Fact Summary. Petitioner’s husband died and left her title to the oil and gas service station that she ran. She and her children decided to sell the property to Texas. Prior to the sale, Petitioner transferred one-half of her interest to her children. Synopsis of Rule of Law. A sale by one person cannot be transformed for tax purposes into a sale by another by using the latter as a conduit through which to pass title. ...
Corliss v. Bowers
CitationCorliss v. Bowers, 281 U.S. 376, 50 S. Ct. 336, 74 L. Ed. 916, 1930 U.S. LEXIS 392, 2 U.S. Tax Cas. (CCH) P525, 8 A.F.T.R. (P-H) 10910, 1930-1 C.B. 254, 1930 P.H. P958 (U.S. Apr. 28, 1930) Brief Fact Summary. Petitioner created a trust for his wife and children. He retained the power to revoke the trust at any time. At issue was whether or not he had to claim the income from the trust as his gross income. Synopsis of Rule of Law. When the grantor of a trust has the power to take full ownership of any part of the corpus of the trust, then the income should be considered as grantor& ...
Commissioner v. Giannini
CitationCommissioner v. Giannini, 129 F.2d 638, 1942 U.S. App. LEXIS 3425, 42-2 U.S. Tax Cas. (CCH) P9595, 29 A.F.T.R. (P-H) 952 (9th Cir. July 8, 1942) Brief Fact Summary. Taxpayer had a right to 5% of net profits of a corporation for which he was a Director and President. After receiving a large sum for the first half of a year, he refused any remaining compensation for that year. Synopsis of Rule of Law. A taxpayer may realize income when he is able to direct its disposition even though he never received it directly. ...
Helvering v. Horst
CitationHelvering v. Horst, 311 U.S. 112, 61 S. Ct. 144, 85 L. Ed. 75, 1940 U.S. LEXIS 1228, 40-2 U.S. Tax Cas. (CCH) P9787, 24 A.F.T.R. (P-H) 1055, 24 A.F.T.R. (P-H) 1058, 1940-1 C.B. 172, 131 A.L.R. 655, 1940 P.H. P62,028 (U.S. Nov. 25, 1940) Brief Fact Summary. Respondent owned negotiable bonds. In 1934 and 1935 he detached interest coupons from them and gave them to his son. Synopsis of Rule of Law. The power to dispose of income is the equivalent of ownership of it. ...
Blair v. Commissioner
CitationBlair v. Commissioner, 300 U.S. 5, 57 S. Ct. 330, 81 L. Ed. 465, 1937 U.S. LEXIS 59, 37-1 U.S. Tax Cas. (CCH) P9083, 18 A.F.T.R. (P-H) 1132, 1937-1 C.B. 175, 1937 P.H. P1158 (U.S. Feb. 1, 1937) Brief Fact Summary. A taxpayer assigned a right to trust income that he inherited in a will to his children. By doing so, the taxpayer claimed that he did not owe income tax on the portion assigned to his children. Synopsis of Rule of Law. Tax liability for income attaches to ownership. ...
Lucas v. Earl
CitationLucas v. Earl, 281 U.S. 111, 1930 U.S. LEXIS 738, 50 S. Ct. 241, 74 L. Ed. 731, 2 U.S. Tax Cas. (CCH) P496, 8 A.F.T.R. (P-H) 10287 (U.S. Mar. 17, 1930) Brief Fact Summary. Respondent had an arrangement with his wife where they owned and received everything as joint tenants. He sought to claim only half of his salary earned as income instead of the entire salary that was paid him. Synopsis of Rule of Law. The individual who earns the salary or income is the one who should be properly taxed. ...
United States v. Kirby Lumber Co
CitationUnited States v. Kirby Lumber Co., 284 U.S. 1, 76 L. Ed. 131, 1931 U.S. LEXIS 457, 52 S. Ct. 4, 2 U.S. Tax Cas. (CCH) P814, 10 A.F.T.R. (P-H) 458 (U.S. Nov. 2, 1931) Brief Fact Summary. Plaintiff, Kirby Lumber Co., issued bonds in a large amount and retired a portion of these by purchasing in the open market at below par value. Synopsis of Rule of Law. If bonds are purchased and retired at a price less than the issuing price or face value, then the excess of the issuing price or face value is gain or income for the taxable year. ...
Zarin v. Commissioner
CitationZarin v. Commissioner, 916 F.2d 110, 1990 U.S. App. LEXIS 17775, 90-2 U.S. Tax Cas. (CCH) P50,530, 66 A.F.T.R.2d (RIA) 5679 (3d Cir. Oct. 10, 1990) Brief Fact Summary. Petitioner continuously received lines of credit from a casino. He was a compulsive gambler and ran up a debt of over $3.4 million. He contested this amount arguing that the casino should not have continued the line of credit, and they settled from $500,000. Synopsis of Rule of Law. If a taxpayer in good faith disputes the amount of a debt, then the subsequent settlement of the debt should be treated as the amount of ...
Crane v. Commissioner
CitationCrane v. Comm’r, 331 U.S. 1, 67 S. Ct. 1047, 91 L. Ed. 1301, 1947 U.S. LEXIS 3021, 47-1 U.S. Tax Cas. (CCH) P9217, 35 A.F.T.R. (P-H) 776, 1947-1 C.B. 97, 1947 P.H. P72,004 (U.S. Apr. 14, 1947) Brief Fact Summary. Petitioner’s husband died and she was the executrix and sole beneficiary of his will. Her husband owned an apartment building subject to a mortgage. Petitioner contracted with the mortagee to continue to operate the property and remit the net rental to mortgagee. Synopsis of Rule of Law. Gain from the sale or disposition of property is the excess of the amount ...
Commissioner v. Tufts
CitationComm’r v. Tufts, 461 U.S. 300, 103 S. Ct. 1826, 75 L. Ed. 2d 863, 1983 U.S. LEXIS 27, 51 U.S.L.W. 4518, 83-1 U.S. Tax Cas. (CCH) P9328, 51 A.F.T.R.2d (RIA) 1132 (U.S. May 2, 1983) Brief Fact Summary. Respondent was a part of a general partnership formed to build a 120 unit apartment complex. A non-recourse loan was received in order to build the complex. However, the partnership was not able to cover the payment of the mortgage and had to sell of the building. Synopsis of Rule of Law. The gain or loss from a sale or other disposition of property is defined as the difference b ...
Taft v. Bowers
CitationTaft v. Bowers, 278 U.S. 470, 49 S. Ct. 199, 73 L. Ed. 460, 1929 U.S. LEXIS 17, 1 U.S. Tax Cas. (CCH) P368, 7 A.F.T.R. (P-H) 8852, 1929-1 C.B. 226, 64 A.L.R. 362, 1929 P.H. P408 (U.S. Feb. 18, 1929) Brief Fact Summary. Petitioner was given shares of stock by her father. When she sold the stock she did not include as income the difference between the cost to her donor father and the price she received. Synopsis of Rule of Law. A recipient of capital assets accepts the position of the donor when receiving property subject to gain. ...
Farid-Es-Sultaneh v. Commissioner
CitationFarid-Es-Sultaneh v. Commissioner, 160 F.2d 812, 1947 U.S. App. LEXIS 3403, 47-1 U.S. Tax Cas. (CCH) P9218, 35 A.F.T.R. (P-H) 1049, 1947 P.H. P72,415 (2d Cir. Apr. 11, 1947) Brief Fact Summary. Petitioner received stock as part of a marriage agreement. Kresge promised to marry and Petitioner promised to relinquish rights to any of his property. Synopsis of Rule of Law. The basis of the item gifted is the basis in the hands of the donor and not the recipient. ...