Sommerfeld Machine Co. v. Commissioner
United States Tax Court
1. Petitioner's receipt of income from manufacture and sale of lathes developed in prior years over a period in excess of 12 months held to entitle petitioner to special relief from excess profits tax under Internal Revenue Code, section 721 (a) (2) (C), with adjustments for expenses deductible in computing net abnormal income, and after application of business improvement factor.
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1. Petitioner's receipt of income from manufacture and sale of lathes developed in prior years over a period in excess of 12 months held to entitle petitioner to special relief from excess profits tax under Internal Revenue Code, section 721 (a) (2) (C), with adjustments for expenses deductible in computing net abnormal income, and after application of business improvement factor. W. B. Knight Machinery Co., 6 T. C. 519, followed. 2. Deductions for compensation to petitioner's officer-stockholders, held partly excessive. 3. Deductions for traveling expenses and sales commissions held to be…
1Opinion of the Court
OPINION.
Opper, Judge:
Whether the salaries paid to petitioner’s officer-stockholders were reasonable is a question of fact. We have disposed of it in our findings.
No one factor was decisive in the formulation of our conclusion. The salaries paid in prior years, the nature of the duties performed, the increase in the demands of the business upon the principal officers, the success of petitioner’s operations, and petitioner’s dividend history are some of the aspects to which consideration has been given. J. J. Hart, Inc., 9 T. C. 135, 140; Wagegro Corp., 38 B. T. A. 1225; Miller Manufacturing…
2Cases cited6 opinions
- W. B. Knight Machinery Co. v. CommissionerUnited States Tax Court · 1946
- Soabar Co. v. CommissionerUnited States Tax Court · 1946
- Morrisdale Coal Mining Co. v. CommissionerUnited States Tax Court · 1949
- Keystone Brass Works v. CommissionerUnited States Tax Court · 1949
- Baltimore Foundry & Machine Corp. v. CommissionerUnited States Tax Court · 1946
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3Cited by1 opinion
- Sommerfeld Machine Co. v. CommissionerUnited States Tax Court · 1950