Whittelsey, Inc. v. Commissioner
United States Tax Court
1. Petitioner was engaged during the taxable year in rendering naval architectural and marine engineering services to the United States Navy under cost plus a fixed fee contracts. Its capital stock was owned by four stockholders, who were regularly engaged in the active conduct of its business. Capital was not a material income-producing factor of the business.
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1. Petitioner was engaged during the taxable year in rendering naval architectural and marine engineering services to the United States Navy under cost plus a fixed fee contracts. Its capital stock was owned by four stockholders, who were regularly engaged in the active conduct of its business. Capital was not a material income-producing factor of the business. The principal stockholder secured the contracts, supervised the performance thereof, directed and instructed petitioner's employees, and was the only person in petitioner's organization who had the scientific knowledge, skill and…
1Opinion of the Court
OPINION.
ARNOLD, Judge:
The principal issue in this case is whether petitioner qualifies as a personal service corporation under section 725 (a) of the Internal Revenue Code, which is set forth in the margin.1 Respondent concedes that petitioner is qualified thereunder to the extent of stock ownership by the principal shareholders and to the extent that capital is not a material income-producing factor in petitioner’s business. In the light of this concession we need discuss only whether the income of the corporation is to be ascribed primarily to the activities of shareholders who are…
2Cases cited1 opinion
- Massachusetts Mutual Life Insurance v. United StatesSupreme Court of the United States · 1933
3Cited by12 opinions
- Sperapani v. CommissionerUnited States Tax Court · 1964
- Lewis v. CommissionerUnited States Tax Court · 1964
- Farmers Nat'l Co. v. CommissionerUnited States Tax Court · 1949
- Farmers National Co. v. CommissionerUnited States Tax Court · 1949
- Farnham Mfg. Co. v. CommissionerUnited States Tax Court · 1949
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