Bakers' Mut. Co-operative Asso. v. Commissioner

Members of association of bakers, organized for the purpose of purchasing raw materials used in the baking industry and selling them to its members, were required by its constitution to make deposits ranging from $300 to $2,000 to be used as working capital. Certificates of deposit issued by the association provided that certificate holders were to share in its profits. At the beginning of its operations, no profit was realized, and the association paid nothing to the certificate holders. During the taxable years, when profits were realized, distributions by the association to the certificate…