United Mercantile Agencies, Inc. v. Commissioner
United States Tax Court
1. The two principal officers of a corporation, who owned or controlled all of the outstanding capital stock, removed checks from the corporation's incoming mail basket, cashed the checks, and divided the proceeds in ratio to the amount of common stock owned or controlled. Held, the diverted funds are taxable as ordinary income to the corporation which is not entitled to an offsetting embezzlement loss under section 23 (f) of the 1939 Code.
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1. The two principal officers of a corporation, who owned or controlled all of the outstanding capital stock, removed checks from the corporation's incoming mail basket, cashed the checks, and divided the proceeds in ratio to the amount of common stock owned or controlled. Held, the diverted funds are taxable as ordinary income to the corporation which is not entitled to an offsetting embezzlement loss under section 23 (f) of the 1939 Code. Held, further, accrued but unpaid Federal taxes are not deductible in determining the amount of the earnings and profits of a cash basis corporation.…
1Opinion of the Court
OPINION.
BRUoe, Judge:
The two individual petitioners, Drybrough and Simpson, owned or controlled all of the outstanding stock of United, the corporate petitioner. During the taxable years involved the individual petitioners took more than $200,000 in checks from the corporation’s incoming-mail basket. They cashed the checks and divided the proceeds in ratio to the amount of common stock owned or controlled by each. They thus caused the corporate income to be understated by the amount of the withdrawals, and no part of the amounts so received was reported on their individual income tax returns.
W…
2Cases cited18 opinions
- Commissioner v. WilcoxSupreme Court of the United States · 1946
- Healy v. CommissionerSupreme Court of the United States · 1953
- Kann v. Commissioner of Internal Revenue. Kann's Estate v. Commissioner of Internal RevenueCourt of Appeals for the Third Circuit · 1954
- Chesbro v. CommissionerUnited States Tax Court · 1953
- Vassallo v. CommissionerUnited States Tax Court · 1955
13 more not listed; retrieve them via the Exa API.
3Cited by76 opinions
- Frank J. Hradesky v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1976
- Gene O. Clark and Faye Clark v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1959
- Federbush v. CommissionerUnited States Tax Court · 1960
- Baird v. CommissionerUnited States Tax Court · 1955
- Stein v. CommissionerUnited States Tax Court · 1956
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