58th St. Plaza Theatre, Inc. v. Commissioner of Internal Revenue. Brecher v. Commissioner of Internal Revenue

The petitioner was assignee of a lease of a moving picture theatre. Its president and controlling stockholder caused the corporation to make a five year sublease of the theatre property to his wife. The corporation’s .license to operate the theatre was surrendered by it and a license was issued by the municipality to the wife. Operation of the theatre was conducted in the wife’s name; rent under the sublease and all other expenses were paid by her and she deposited in her own bank account all receipts. She reported net income of $40,000 from the business and paid the federal income tax…