Bavis v. Commissioner
United States Tax Court
Petitioners, key employees of the Chichester Chemical Company owned by D. D. Chidester, agreed after Chidester's death in 1927 to remain with the Company in consideration of the salaries which they were then receiving plus a ratable share of 6 per cent of gross sales of the Company.
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Petitioners, key employees of the Chichester Chemical Company owned by D. D. Chidester, agreed after Chidester's death in 1927 to remain with the Company in consideration of the salaries which they were then receiving plus a ratable share of 6 per cent of gross sales of the Company. Chidester owed large amounts of debts at the time of his death and his wife, who was executrix of his estate, agreed with the creditors that the Company should be operated under an agreement with the creditors providing for their eventual payment. The key employees of the Company, including petitioners, agreed to…
1DissentRice, J.
I dissent on the first issue and would hold that the shares of stock distributed to petitioners in 1946 constituted back pay under section 107 (d) of the Code.
As set out in the majority opinion, back pay includes compensation received or accrued during the taxable year by an employee for services performed prior to the taxable year and which would have been paid prior thereto except for the intervention of certain events. One such event is bankruptcy or receivership of the employer, and another is any other event determined to be similar in nature under regulations prescribed by the…
2Cases cited3 opinions
- Kenny v. CommissionerUnited States Tax Court · 1945
- Langer's Estate v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1950
- Dean v. CommissionerUnited States Tax Court · 1948