Hewett v. Commissioner
United States Tax Court
Petitioner, the sole stockholder of Hewett Studios, Inc., transferred 30,000 shares of his own stock in that corporation to two salesmen as commissions for selling unissued but authorized stock of the corporation to raise funds to meet its financial crisis. The corporation received all of the proceeds of sale of the unissued stock to the public.
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Petitioner, the sole stockholder of Hewett Studios, Inc., transferred 30,000 shares of his own stock in that corporation to two salesmen as commissions for selling unissued but authorized stock of the corporation to raise funds to meet its financial crisis. The corporation received all of the proceeds of sale of the unissued stock to the public. Held, petitioner is not entitled to deduct on his individual return the value of the shares of stock he transferred to the two salesmen under either sec. 162 or sec. 212, I.R.C. 1954.
1Opinion of the Court
Duennen, Judge:
Respondent determined a deficiency in petitioners’ income tax for the taxable year 1962 in the amount of $19,441.53.
The sole issue remaining for decision is whether petitioners are entitled to a deduction of $30,000, the par value of stock in a corporation owned 'by petitioner transferred by petitioner to two individuals as commissions for sale of unissued stock of the corporation, either as an “ordinary and necessary” business expense under section 162, I.R.C. 1954,1 or as a nonbusiness expense incurred for the production of income, or for the conservation of property held for…
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