Shield Co. v. Commissioner
United States Tax Court
1. Distributions from Capital -- Taxability under Section 115 (D) -- Repayment. -- A distribution by a corporation to its shareholders not in partial or complete liquidation and not out of earnings and profits is taxable as a gain from the sale or exchange of property, in so far as the distribution exceeds the basis of the stock to them. 2. Deduction for Salaries. -- The action of respondent in disallowing a deduction by petitioner corporation of $ 6,000 of a total of $…
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1. Distributions from Capital -- Taxability under Section 115 (D) -- Repayment. -- A distribution by a corporation to its shareholders not in partial or complete liquidation and not out of earnings and profits is taxable as a gain from the sale or exchange of property, in so far as the distribution exceeds the basis of the stock to them. 2. Deduction for Salaries. -- The action of respondent in disallowing a deduction by petitioner corporation of $ 6,000 of a total of $ 30,000 paid by it as officers' salaries is approved, petitioner having failed to sustain the burden of proving that the…
1Opinion of the Court
OPINION.
Hnx. Jvdge:
1. On July 1 of each of the years 1936 and 193V the directors of United Appliance Corporation declared a $50,000 so-called dividend payable on the following August 31. When such dividends were declared and paid, United’s earnings were less than the distributions authorized and made. The directors believed, however, that expected earnings and profits for the balance of each fiscal year ended, respectively. February 28, 1937, and February 28, 1938, would make up the difference. To make possible the payments on August 31, United borrowed $50,000 from petitioner conicident…
2Cases cited1 opinion
- Burnet v. HarmelSupreme Court of the United States · 1932
3Cited by40 opinions
- James A. Messer Co. v. CommissionerUnited States Tax Court · 1972
- Miller Mfg. Co. v. Commissioner of Internal RevenueCourt of Appeals for the Fourth Circuit · 1945
- Gross v. CommissionerUnited States Tax Court · 1955
- New York Water Service Corp. v. CommissionerUnited States Tax Court · 1949
- Charles McCandless Tile Service v. United StatesUnited States Court of Claims · 1970
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