Anaheim Union Water Co. v. Commissioner
United States Tax Court
1. X and Y, so-called nonprofit corporations not exempt from tax, sold water or furnished water services only to their shareholders. Each also received substantial income from sources unrelated to its water business. Each fixed its water charges to its shareholders below cost so that its water and non-water income together would annually approximate its water costs and leave it without profit.
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1. X and Y, so-called nonprofit corporations not exempt from tax, sold water or furnished water services only to their shareholders. Each also received substantial income from sources unrelated to its water business. Each fixed its water charges to its shareholders below cost so that its water and non-water income together would annually approximate its water costs and leave it without profit. Held, to the extent that the water costs were in excess of the charges to the shareholders for such water or water services, the expenses were not deductible as "ordinary and necessary" business…
1Opinion of the Court
OPINION.
Raum, Judge:
1. Although Anaheim was at one time an exempt corporation, it had ceased to be such for a number of years because of the substantial income which it had been receiving from oil royalties and other sources.1 There is no dispute between the parties that Anaheim is a taxable corporation, and this case must be decided upon that assumption. The Commissioner determined that Anaheim’s water costs or expenses incurred in the distribution of water to its shareholders were not deductible as ordinary and necessary business expenses to the extent that they exceeded the revenue…
2Cases cited7 opinions
- Welch v. HelveringSupreme Court of the United States · 1933
- National Carbide Corp. v. CommissionerSupreme Court of the United States · 1949
- Podems v. CommissionerUnited States Tax Court · 1955
- United States v. Joliet & Chicago RailroadSupreme Court of the United States · 1942
- International Trading Co. v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1960
2 more not listed; retrieve them via the Exa API.
3Cited by21 opinions
- South Texas Rice Warehouse Co. v. CommissionerUnited States Tax Court · 1965
- Hunter v. CommissionerUnited States Tax Court · 1966
- Adirondack League Club v. CommissionerUnited States Tax Court · 1971
- Iowa State University of Science & Technology v. United StatesUnited States Court of Claims · 1974
- Anaheim Union Water Company v. Commissioner of Internal Revenue, Santa Ana River Development Co. v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1963
16 more not listed; retrieve them via the Exa API.