Commissioner v. Munter

The Commissioner assessed deficiencies against respondents for failure to report as 1940 income dividends paid to them on stock of Crandall-McKenzie & Henderson, Inc., which respondents had bought earlier in that year. These dividends are taxable as income to the respondents if the corporation paid them out of its earnings and profits. Int. Rev. Code §§22 (a), 115 (a), (b). Since its organization in 1928, the corporation had not accumulated earnings and profits sufficient to pay the 1940 dividend in full. But the Commissioner found that the two old corporations which were merged in 1928 to…