Brown v. Commissioner of Internal Revenue (Two Cases)

MARIS, Circuit Judge.

These cases involve the deductibility as business expenses in computing the net taxable income of the taxpayers of certain rents and royalties paid by them to the trustee of two trusts created by them for the benefit of their children. They grow out of the following facts:

Taxpayers are husband and wife, residing in Clearfield, Pennsylvania. Their individual tax returns for the calendar year 1944 were filed on the cash receipts and disbursements basis.

*927Taxpayers were engaged as partners in the general contracting and coal-mining business. In 1943 the business was growing.…