Tavannes Watch Co. v. Commissioner of Internal Rev.

FRANK, Circuit Judge.

Before the adoption of the Revenue Act of 1942, payments made to employees’ profit-sharing funds could be deducted either as “ordinary and necessary” business expenses, under Section 23(a) of the Code, 26 U.S.C.A. § 23(a), or under the specific provisions for such deductions of Section 23 (p) of the Code. In the Revenue Act of 1942 Congress forbade any such deductions except in accord with Section 23 (p) of the Code as amended by that Act.

A contribution paid into a profit-sharing trust is deductible under Section 23 (p), as amended, if, among other things, the trust “is…