Graham Flying Service v. Commissioner
United States Tax Court
The petitioner, through its president (who owned 96 per cent of its stock) and a staff of assistants, conducted a flying school. A substantial amount of capital was used to purchase facilities and equipment, including aircraft, required for the school. Held, on the facts, that petitioner is not a personal service corporation as defined in section 725 (a).
1Opinion of the Court
OPINION.
LeMire, Judge:
The main question for decision is whether the petitioner is a personal service corporation within section 725 (a) of the Internal Eevenue Code.1
The respondent concedes that the petitioner has met all of the statutory conditions for qualification, except the following:
1. That the petitioner’s “income is to be ascribed primarily to the activities of shareholders who are regularly engaged in the active conduct of the affairs of the corporation,’’ and
2. That the petitioner’s “capital is not a material income-producing factor.” (Italics supplied.)
Similar conditions were…
2Cases cited1 opinion
- Fairfax Mut. Wood Products Co. v. CommissionerUnited States Tax Court · 1945
3Cited by9 opinions
- Sperapani v. CommissionerUnited States Tax Court · 1964
- Danco Co. v. CommissionerUnited States Tax Court · 1950
- Rousku v. CommissionerUnited States Tax Court · 1971
- ALEXANDER v. COMMISSIONERUnited States Tax Court · 1978
- Danco Co. v. CommissionerUnited States Tax Court · 1950
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