Dobkin v. Commissioner
United States Tax Court
Petitioner and his three associates organized a corporation to hold and manage a parcel of business realty. Approximately $ 27,000 was required to finance the purchase over and above outstanding first and second mortgages. Petitioner and his associates each paid $ 7,000 of which $ 500 was designated capital stock and the remaining $ 6,500 was set up on the corporation's books as "Loans Payable."
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Petitioner and his three associates organized a corporation to hold and manage a parcel of business realty. Approximately $ 27,000 was required to finance the purchase over and above outstanding first and second mortgages. Petitioner and his associates each paid $ 7,000 of which $ 500 was designated capital stock and the remaining $ 6,500 was set up on the corporation's books as "Loans Payable." When additional working capital was required, the equality of investment was maintained by equal contributions. Held: The entire amount paid in by petitioner was intended to be risk capital. His loss…
1Opinion of the Court
OPINION.
Arundele, Judge:
Petitioner’s contention that the funds which he paid in to Huguenot should be treated as loans so as to entitle him to a bad debt deduction on the corporation’s liquidation runs squarely into our decision in Edward G. Janeway, 2 T. C. 197, affd., 147 Fed. (2d) 602.
Ordinarily contributions by stockholders to their corporations are regarded as capital contributions that increase the cost basis of their stock, thus affecting the determination of gain or loss on ultimate dispositions of the stock. Harry Sackstein, 14 T. C. 566. Especially is this true when the capital…
2Cases cited7 opinions
- Pepper v. LittonSupreme Court of the United States · 1939
- John Kelley Co. v. CommissionerSupreme Court of the United States · 1946
- Schnitzer v. CommissionerUnited States Tax Court · 1949
- Janeway v. CommissionerUnited States Tax Court · 1943
- Mullin Bldg. Corp. v. CommissionerUnited States Tax Court · 1947
2 more not listed; retrieve them via the Exa API.
3Cited by124 opinions
- Kraft Foods Company v. Commissioner of Internal Revenue, (Two Cases)Court of Appeals for the Second Circuit · 1956
- Aldon Homes, Inc. v. CommissionerUnited States Tax Court · 1959
- Santa Anita Consol., Inc. v. CommissionerUnited States Tax Court · 1968
- Smith v. CommissionerUnited States Tax Court · 1951
- Benjamin v. CommissionerUnited States Tax Court · 1976
119 more not listed; retrieve them via the Exa API.