Fitzgerald Motor Co. v. Commissioner
United States Tax Court
Interest-free loans (or non-arm's-length loans at less than 5-percent interest) were made between brother-sister corporations.
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Interest-free loans (or non-arm's-length loans at less than 5-percent interest) were made between brother-sister corporations. Held, following Kerry Investment Co., 58 T.C. 479, the Commissioner had the power under sec. 482, I.R.C. 1954, to allocate gross income to the lender measured by 5 percent of the loans, where the lender corporation failed to establish that such loans did not generate income to the borrower corporation in an amount equal at least to the amount allocated by the Commissioner.
1Opinion of the Court
OPINION
Naum, Judge:
The Commissioner determined deficiencies in income tax as follows:
Docket No. Petitioner TYE July, 31-Amount 2135-72_Fitzgerald Motor Co., Inc-2136-72.Loans, Inc.. 1966 1967 1968 1966 1967 1968 $681.34 722.46 2,081.56 1,039.54 1,046.15 2,300.38
At issue is the propriety of the Commissioner’s action under section 482 of the 1954 Code in allocating additional income to petitioners in respect of loans to brother-sister corporations that were interest-free or at less than arm’s-length rates of interest. The facts have been stipulated.
Petitioner Fitzgerald Motor Co., Inc.…
2Cases cited11 opinions
- Massachusetts v. United StatesSupreme Court of the United States · 1948
- PPG Indus., Inc. v. CommissionerUnited States Tax Court · 1970
- Huber Homes, Inc. v. CommissionerUnited States Tax Court · 1971
- Moore v. United StatesSupreme Court of the United States · 1972
- B. Forman Co. v. CommissionerCourt of Appeals for the Second Circuit · 1972
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3Cited by17 opinions
- Latham Park Manor, Inc. v. CommissionerUnited States Tax Court · 1977
- Crown v. CommissionerUnited States Tax Court · 1977
- Edwards v. CommissionerUnited States Tax Court · 1976
- Fitzgerald Motor Company, Inc., and Loans, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1975
- Collins Electrical Co. v. CommissionerUnited States Tax Court · 1977
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