Foley Machinery Co. v. Commissioner
United States Tax Court
P was the sole shareholder of E, a corporation which elected to be treated as a DISC. In 1981 and 1982, after E had lost its DISC qualification, P paid E commissions as determined under sec. 994, I.R.C. 1954. E, in turn, made distributions to P during 1981 and 1982. At the time of these transactions, neither P nor E was aware of the loss of E's DISC qualification.
Read the full summary
P was the sole shareholder of E, a corporation which elected to be treated as a DISC. In 1981 and 1982, after E had lost its DISC qualification, P paid E commissions as determined under sec. 994, I.R.C. 1954. E, in turn, made distributions to P during 1981 and 1982. At the time of these transactions, neither P nor E was aware of the loss of E's DISC qualification. Respondent determined that E's distributions to P should be taxed as actual distributions to the extent they exceed previously taxed income. Held, E's 1981 and 1982 distributions to P are actual distributions and are taxable to P to…
1Opinion of the Court
OPINION
RUWE, Judge:*
Respondent determined a deficiency in petitioner’s Federal income tax for the taxable years 1981 and 1982 in the respective amounts of $89,574.58 and $264,854.92. The issues for decision are whether distributions which Foley Equipment, Co. (Equipment) made to petitioner during 1981 and 1982 may be recharacterized as nontaxable repayments of commissions paid in error, rather than actual distributions made with respect to petitioner’s stock, or, in the alternative, whether petitioner should be allowed to recharacterize the distributions it received from Equipment as…
2Cases cited13 opinions
- Commissioner v. National Alfalfa Dehydrating & Milling Co.Supreme Court of the United States · 1974
- Paula Constr. Co. v. CommissionerUnited States Tax Court · 1972
- Westinghouse Electric Corp. v. TullySupreme Court of the United States · 1984
- Gehl Company v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1986
- Thomas International Limited v. The United StatesCourt of Appeals for the Federal Circuit · 1985
8 more not listed; retrieve them via the Exa API.
3Cited by8 opinions
- Garnac Grain Co. v. CommissionerUnited States Tax Court · 1990
- Hellweg v. Comm'rUnited States Tax Court · 2011
- Brewer v. CommissionerUnited States Tax Court · 1989
- Daniel E. Larkin & Christine L. Larkin v. CommissionerUnited States Tax Court · 2020
- Estate of Hollo v. CommissionerUnited States Tax Court · 1990
3 more not listed; retrieve them via the Exa API.