Merrill Trust Co. v. Commissioner
United States Board of Tax Appeals
1. An amount credited by a taxpayer to a pension fund set up by it for the benefit of its employees may not be deducted as an ordinary and necessary business expense in the absence of evidence establishing that an enforceable trust was created. 2. In determining whether such a trust was created, the fact that the taxpayer, experienced in trust matters, deliberately refrained from making a trust agreement or declaration can not be casually regarded. 3. Testimony of a trust…
Read the full summary
1. An amount credited by a taxpayer to a pension fund set up by it for the benefit of its employees may not be deducted as an ordinary and necessary business expense in the absence of evidence establishing that an enforceable trust was created. 2. In determining whether such a trust was created, the fact that the taxpayer, experienced in trust matters, deliberately refrained from making a trust agreement or declaration can not be casually regarded. 3. Testimony of a trust officer of the taxpayer that he understood that other officers contemplated the pension fund to be permanent and…
1Opinion of the Court
*1410OPINION.
SteRNhagen:
From an examination of numerous cases already decided, from William J. Ostheimer, 1 B. T. A. 18, through Spring Canyon Coal Co. v. Commissioner, 43 Fed. (2d) 78, affirming 13 B. T. A. 189, it is apparent that a reserve set up by a taxpayer to meet future demands is not deductible as a business expense. Cf. Lucas v. American Code Co., 280 U. S. 445. While, upon detailed evidence establishing an enforceable trust, it has been held that irrecoverable payments thereto were, under the circumstances, deductible, Hibbard, Spencer, Bartlett & Co., 5 B. T. A. 464; Lemuel Scarbrough,…
2Cases cited1 opinion
- Lucas v. American Code Co.Supreme Court of the United States · 1930
3Cited by6 opinions
- Thomas Trebotich and Jeanne Trebotich v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1974
- Trebotich v. CommissionerUnited States Tax Court · 1971
- Caxton Printers, Ltd. v. CommissionerUnited States Board of Tax Appeals · 1933
- Manufacturers Life Ins. Co. v. CommissionerUnited States Board of Tax Appeals · 1941
- Merrill Trust Co. v. CommissionerUnited States Board of Tax Appeals · 1931
1 more not listed; retrieve them via the Exa API.