Kathman v. Commissioner
United States Tax Court
K, a distributor for a food supplement company, had subordinate salesmen who were required to purchase the company's product solely from K. Three of these salesmen paid $ 10,000 each to the company, which in turn forwarded the money to K. Thereupon, K canceled his contract with these salesmen enabling them to purchase the products directly from the company.
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K, a distributor for a food supplement company, had subordinate salesmen who were required to purchase the company's product solely from K. Three of these salesmen paid $ 10,000 each to the company, which in turn forwarded the money to K. Thereupon, K canceled his contract with these salesmen enabling them to purchase the products directly from the company. Held, these transactions do not qualify as a sale or exchange of a capital asset under sec. 1221, I.R.C. 1954, and the gain attributable thereto is taxable as ordinary income.
1Opinion of the Court
Tietjens, Judge:
The commissioner determined deficiencies in income taxes for tbe taxable year 1961 in tbe amount of $3,214.83, all of which is in dispute except that portion which petitioner has conceded relating to respondent’s adjustment of $500 for a mathematical error. The sole question is whether certain amounts received by Roger Kathman during 1961, for the release of three individual distributors from their obligation to purchase certain products solely from him, constituted ordinary income or capital gains.
FINDINGS OF FACT
Some of the facts are stipulated. The stipulation and attached…
2Cases cited39 opinions
- Burnet v. HarmelSupreme Court of the United States · 1932
- Corn Products Refining Co. v. CommissionerSupreme Court of the United States · 1956
- Commissioner v. P. G. Lake, Inc.Supreme Court of the United States · 1958
- Hort v. CommissionerSupreme Court of the United States · 1941
- Commissioner v. Gillette Motor Transport, Inc.Supreme Court of the United States · 1960
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3Cited by3 opinions
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- Kathman v. CommissionerUnited States Tax Court · 1968
- Republic Automotive Parts, Inc. v. CommissionerUnited States Tax Court · 1977