Groves v. Commissioner
United States Board of Tax Appeals
1. During the taxable year a taxpayer made numerous withdrawals from and payments to a corporation of which he was president and 90 percent shareholder, later giving notes for the balance due, which he eventually paid in full with interest.
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1. During the taxable year a taxpayer made numerous withdrawals from and payments to a corporation of which he was president and 90 percent shareholder, later giving notes for the balance due, which he eventually paid in full with interest. Held, the withdrawals were not distributions of corporate profits, but loans. 2. Attorneys' fees paid by an individual taxpayer for services directly relating to his business activities, which were largely devoted to the conduct of numerous corporations themselves carrying on business, held deductible by him as ordinary and necessary business expenses. 3.…
1Opinion of the Court
*732OPINION.
Sternhagen: 1. The Commissioner, in the notice of deficiency, included in the petitioner’s income for 1932, $74,098.44, which he called “distribution of corporate profits.” This figure is the remainder of the $134,098.44 charged to petitioner’s account on the Domestic corporation’s book, the other $60,000 being treated as salary and considered in a separate item. The Commissioner said: “There is no evidence to substantiate your contention that these drawings were loans; no notes or other evidence of indebtedness were given at the time the money was drawn; no interest was paid.” He…
2Cases cited2 opinions
- Jones v. HodgesU.S. Circuit Court for the District of Massachusetts · 1871
- Benson v. ReinshagenNew Jersey Court of Chancery · 1909
3Cited by21 opinions
- Funk v. Commissioner of Internal RevenueCourt of Appeals for the Third Circuit · 1947
- Hughes v. CommissionerUnited States Tax Court · 1964
- Coldwater Seafood Corp. v. CommissionerUnited States Tax Court · 1978
- Keith v. CommissionerUnited States Tax Court · 1961
- Newhouse v. CommissionerUnited States Tax Court · 1973
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