S. Naitove & Co. v. Commissioner

■VAN ORSDEL, Associate Justice.

Appellant, a New York corporation engaged in buying and selling woolen, silk, and cotton goods, had five employees who constituted the entire buying and selling staff of the business. These employees, dissatisfied with their compensation, threatened to go into business for themselves. To retain them, an agreement was entered into by the appellant and the employees' under which they were to participate in the profits of the business. The agreement was expressed in a resolution passed by the board of directors on February 10, 1919, as follows:

“Resolved, That…