Lusthaus v. Commissioner
United States Tax Court
Husband and Wife Partnership. -- Petitioner entered into a partnership agreement with his wife in 1940, purporting to make her an equal partner in a furniture business which he had operated for a number of years. He gave her $ 50,000, which she immediately returned to him, with her promissory notes for $ 55,000 and a negligible amount of her own funds, in payment for her one-half interest.
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Husband and Wife Partnership. -- Petitioner entered into a partnership agreement with his wife in 1940, purporting to make her an equal partner in a furniture business which he had operated for a number of years. He gave her $ 50,000, which she immediately returned to him, with her promissory notes for $ 55,000 and a negligible amount of her own funds, in payment for her one-half interest. Thereafter, she contributed no additional capital and rendered only casual services to the business, as she had always done. Held, that all of the profits of the business are taxable to petitioner as his…
1Opinion of the Court
OPINION.
Smith, Judge-.
We think that the respondent has correctly determined that petitioner is taxable on all of the profits from his furniture business in 1940. The evidence here discloses another of those superficial arrangements whereby a husband undertakes to make his wife a partner in his business for the obvious, if not the sole, purpose of reducing his income taxes.
The picture here is plainly drawn for us. About 1939 petitioner found himself confronted with the prospect of large earnings from his furniture business and the certainty of large income taxes. The matter of the taxes caused…
2Cases cited1 opinion
- Tower v. CommissionerUnited States Tax Court · 1944
3Cited by5 opinions
- Greenberg v. CommissionerUnited States Tax Court · 1945
- Schreiber v. CommissionerUnited States Tax Court · 1946
- Lusthaus v. CommissionerUnited States Tax Court · 1944
- Schreiber v. CommissionerUnited States Tax Court · 1946
- Wilkoff v. CommissionerUnited States Tax Court · 1947