L. R. Schmaus Co., Inc. v. Commissioner of Internal Revenue

DUFFY, Senior Circuit Judge.

L. R. Schmaus was the sole stockholder of L. R. Schmaus Co., Inc., a Wisconsin corporation. He, his wife and son-in-law, William Mammen, comprised the Board of Directors. The executive responsibilities for the corporation were carried on by Schmaus and Mammen, but Schmaus had the over-all responsi bility for the plumbing contracting business.

The corporate books were maintained on a calendar year basis using the accrual method of accounting. The corporate income tax returns were prepared on the same basis.

The question principally litigated before the Tax Court was…