Rapid Electric Co. v. Commissioner
United States Tax Court
Held, the extension of credit between two corporations did not result in a constructive dividend to the individual taxpayer owning the stock of both corporations where such credit was not granted primarily for the benefit of the taxpayer and he received no direct benefit therefrom.
Read the full summary
Held, the extension of credit between two corporations did not result in a constructive dividend to the individual taxpayer owning the stock of both corporations where such credit was not granted primarily for the benefit of the taxpayer and he received no direct benefit therefrom. Held, further, corporate petitioner is not entitled to deduct certain personal expenditures made on behalf of its president and sole shareholder as compensation under sec. 162, I.R.C. 1954, where it failed to show that such amounts were intended as compensation.
1Opinion of the Court
Quealt, Judge:
Respondent detérmined the following deficiencies in these consolidated cases:
[[Image here]]
James A. Viola, petitioner in docket No. 6622-71 and joint petitioner with his wife, Evelyn Viola, in docket No. 6623-71, is the owner of all the outstanding shares of stock of both Rapid Electric Co., Inc. (hereinafter referred to as Rapid New York), and Rapid Electric Co. of Puerto Rico, Inc. (hereinafter referred to as Rapid Puerto Rico). The principal issue for our decision is whether the extension of credit on its books by Rapid Puerto Rico to its sister corporation, Rapid New York,…
2Cases cited10 opinions
- Challenge Mfg. Co. v. CommissionerUnited States Tax Court · 1962
- Rushing v. CommissionerUnited States Tax Court · 1969
- W. B. Rushing v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1971
- Thomas Worcester v. Commissioner of Internal RevenueCourt of Appeals for the First Circuit · 1966
- Charles A. Sammons, Individually, and Estate of Rosine S. Sammons, Deceased, Charles A. Sammons, Independent v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1973
5 more not listed; retrieve them via the Exa API.
3Cited by52 opinions
- Magnon v. CommissionerUnited States Tax Court · 1980
- James and Martha Kuper and Charles and Kathleen Kuper, Cross-Appellees v. Commissioner of Internal Revenue, Cross-AppellantCourt of Appeals for the Fifth Circuit · 1976
- Smith v. CommissionerUnited States Tax Court · 1978
- Schwartz v. CommissionerUnited States Tax Court · 1978
- Gilbert v. CommissionerUnited States Tax Court · 1980
47 more not listed; retrieve them via the Exa API.