Italian American Grocery Co. v. Commissioner

Petitioner, a corporation, was organized in 1933 to take over the grocery business of three equal partners. Shortly thereafter the business was expanded to include a restaurant which then became the main part of the business. In 1937 one of the three stockholders died and the two remaining stockholders each acquired one-half of his interest in petitioner from his estate. Thereafter, these two remaining stockholders each owned 50 per cent of petitioner's stock and did all of the managing of petitioner's business. In 1936 petitioner adopted a contingent bonus plan which was modified slightly…