Sterno Sales Corp. v. United States

The Commissioner of Internal Revenue has had his “pound of flesh.” What he seeks now by denying this refund is “unreasonably and excessively” punitive in nature.

The maj ority rests its holding on the grounds that taxpayer (in receiving) and Sterno, Inc. (in making) intended to treat the payments as compensation, albeit as later determined “excessive and unreasonable” and, in so doing, taxpayer is precluded from casting this transaction in another form. However, intent is not the touchstone in determining whether a corporate payment is a dividend or compensation for services actually rendered.…