Affiliated Enterprises, Inc. v. Commissioner
United States Board of Tax Appeals
1. Taxpayer was organized to carry on the business of selling a sales promotion or advertising plan, originated by its two chief stockholders, known as Bank Night, or the Affiliated System. The system was not patented or copyrighted, although some instruction sheets were copyrighted. Petitioner's income, in excess of 80 percent, was derived from payments from theatre operators under contracts designated as license agreements.
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1. Taxpayer was organized to carry on the business of selling a sales promotion or advertising plan, originated by its two chief stockholders, known as Bank Night, or the Affiliated System. The system was not patented or copyrighted, although some instruction sheets were copyrighted. Petitioner's income, in excess of 80 percent, was derived from payments from theatre operators under contracts designated as license agreements. Over 50 percent of petitioner's stock was held by less than 5 persons. Respondent determined that petitioner was subject to surtax as a personal holding company under…
1Opinion of the Court
*397OPINION.
HabRon:
Issue 1 — 0ompensoMon for personal services. — Under section 23 (a) of the Revenue Acts of 1934 and 1936 a taxpayer may deduct as business expense all ordinary and necessary expenses paid or incurred, including a reasonable allowance for salaries or other compensation for personal services actually rendered. The respondent has made a determination, which is prima facie correct, that a reasonable allowance for compensation for the personal services of Clover Yaeger is $1,200 and $600 for 1935 and 1936, respectively. He has disallowed in full deductions claimed for sums paid to…
2Cases cited5 opinions
- Botany Worsted Mills v. United StatesSupreme Court of the United States · 1929
- Commonwealth v. Phila. Rapid Transit Co.Supreme Court of Pennsylvania · 1926
- Wagegro Corp. v. CommissionerUnited States Board of Tax Appeals · 1938
- Watson v. CommissionerUnited States Board of Tax Appeals · 1932
- New York Talking Machine Co. v. CommissionerUnited States Board of Tax Appeals · 1928
3Cited by6 opinions
- Affiliated Enterprises, Inc. v. CommissionerCourt of Appeals for the Tenth Circuit · 1944
- Affiliated Enterprises, Inc. v. CommissionerUnited States Board of Tax Appeals · 1940
- Hoffman Radio Corp. v. CommissionerUnited States Tax Court · 1948
- Lane-Wells Co. v. CommissionerUnited States Board of Tax Appeals · 1941
- Miller Mfg. Co. v. CommissionerUnited States Tax Court · 1944
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