Palm Beach Aero Corp. v. Commissioner
United States Tax Court
1. The majority stockholders of the petitioner, which was engaged in the business of furnishing supplies, materials and a training base for the Civil Air Patrol, organized a partnership which took over the petitioner's operating activities.
Read the full summary
1. The majority stockholders of the petitioner, which was engaged in the business of furnishing supplies, materials and a training base for the Civil Air Patrol, organized a partnership which took over the petitioner's operating activities. Held, the respondent erred in refusing to recognize the partnership for tax purposes, and in holding the petitioner taxable on the net income of the partnership either under section 22 (a) or section 45, Internal Revenue Code. 2. Held, further, there being no excess profits tax due for 1943, the petitioner is not subject to the 25 per cent delinquency…
1Opinion of the Court
OPINION.
Arundell, Judge:
We find no merit in the respondent’s contention that the partnership formed by petitioner’s majority stockholders was a sham and that its income should be attributed to the petitioner for tax purposes. There is sufficient evidence to establish that the partnership was a bona fide business organization, in substance as well as form, which should not be ignored for tax purposes. Respondent recognizes the well-established principle that a taxpayer' may adopt any form of doing business that he chooses and is not required to conduct his business affairs in the form most…
2Cases cited10 opinions
- Higgins v. SmithSupreme Court of the United States · 1940
- Gilken Corporation v. Commissioner of Internal Rev.Court of Appeals for the Sixth Circuit · 1949
- Gilken Corp. v. CommissionerUnited States Tax Court · 1948
- Astor Holding Co. v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1943
- Commissioner of Internal Revenue v. LyonCourt of Appeals for the Ninth Circuit · 1938
5 more not listed; retrieve them via the Exa API.
3Cited by3 opinions
- Tillotson v. McCroryDistrict Court, D. Nebraska · 1962
- Nelson Bros., Inc. v. CommissionerUnited States Tax Court · 1992
- Palm Beach Aero Corp. v. CommissionerUnited States Tax Court · 1952