Patmon, Young & Kirk, Professional Corporation v. Commissioner of Internal Revenue

LIVELY, Circuit Judge.

The single issue for decision is whether a cash basis corporate taxpayer may deduct in the year of its delivery the value of a demand promissory note guaranteed by its stockholders and delivered to the trustees of its profit-sharing trust as a contribution to that trust where the note remains unpaid at the end of the taxable year. We hold that it is not entitled to the claimed deduction and affirm the Tax Court.

The facts were stipulated. Petitioner is a professional corporation organized under the laws of Michigan. The three officers, who are also the only shareholders…