Maynard Hospital, Inc. v. Commissioner
United States Tax Court
Maynard, a hospital, obtained in 1934 an exemption from Federal income tax as a charitable organization. In 1940 it transferred its pharmacy to its stockholder-trustees who operated the pharmacy for profit, selling certain drugs to Maynard for at least 10 percent in excess of the amount for which Maynard could have bought the drugs elsewhere. In the midfifties Maynard commenced paying salaries to certain of its stockholder-trustees.
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Maynard, a hospital, obtained in 1934 an exemption from Federal income tax as a charitable organization. In 1940 it transferred its pharmacy to its stockholder-trustees who operated the pharmacy for profit, selling certain drugs to Maynard for at least 10 percent in excess of the amount for which Maynard could have bought the drugs elsewhere. In the midfifties Maynard commenced paying salaries to certain of its stockholder-trustees. Maynard's strictly charitable services were less than 1 percent of the amount of its charged-for-services although it never turned down an emergency case because…
1Opinion of the Court
OPINION
The principal question to be decided is whether Maynard was a tax-exempt organization. This determination will affect not only the issue of the deficiencies determined against the corporation and the liabilities of the stockholders as transferees of such deficiencies but also the issue of whether the amounts received by the stockholders upon liquidation of Maynard were ordinary income or capital gain. If Maynard was a nonexempt taxable corporation owned by its stockholders, the question of the taxability of the distributions to the stockholders might be treated differently than it…
2Cases cited11 opinions
- Commissioner v. Court Holding Co.Supreme Court of the United States · 1945
- Automobile Club of Mich. v. CommissionerSupreme Court of the United States · 1957
- Helvering v. BlissSupreme Court of the United States · 1934
- Ciaio v. CommissionerUnited States Tax Court · 1967
- Estate of Scharf v. CommissionerUnited States Tax Court · 1962
6 more not listed; retrieve them via the Exa API.
3Cited by14 opinions
- Hope v. CommissionerUnited States Tax Court · 1971
- Lowry Hosp. Ass'n v. Comm'rUnited States Tax Court · 1976
- Harding Hospital, Inc. v. United StatesCourt of Appeals for the Sixth Circuit · 1974
- Wisconsin Nipple & Fabricating Corp. v. CommissionerUnited States Tax Court · 1976
- St. David's Health Care System v. United StatesCourt of Appeals for the Fifth Circuit · 2003
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