Clover Farm Stores Corp. v. Commissioner

OPINION.

Raum, Judge:

Petitioner is a corporation organized for profit, and does not claim to be exempt from taxation under section 101. or any other provision of the Internal Revenue Code. It does contend, however, that its gross income must be reduced by patronage dividends which it paid to its stockholder-members, and the Commissioner does not disagree that such reduction is proper, provided that the amounts involved are true patronage dividends.

The concept that “patronage dividends” paid by a corporation may operate to reduce its gross income (or constitute a “deduction” therefrom) is not…