Omholt v. Commissioner
United States Tax Court
A corporation entered into an agreement with its controlling stockholder for the acquisition of a patent covering a flooring system providing for the payment of a royalty which was adjusted from time to time by agreement of the parties. Following the close of each taxable year, the corporation would compute the amount of the royalty due and issue its notes for the amount thereof. Thereafter, the corporation made payments on the notes as funds became available.
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A corporation entered into an agreement with its controlling stockholder for the acquisition of a patent covering a flooring system providing for the payment of a royalty which was adjusted from time to time by agreement of the parties. Following the close of each taxable year, the corporation would compute the amount of the royalty due and issue its notes for the amount thereof. Thereafter, the corporation made payments on the notes as funds became available. Held, irrespective of any agreement between the parties, a reasonable royalty within the meaning of sec. 167(a), I.R.C. 1954, did not…
1Opinion of the Court
Qtteat.v, Judge:
The respondent determined deficiencies in income tax to be due from the petitioners as follows:
Docket No» 2702-70__ Powerlock Systems, Inc. Docket No. 2703-70.---Deficiency $4, 374. 63 12, 484. 02 24, 860. 79 Deficiency $9, 792. 08 14, 784. 82 17, 257. 02 20, 765. 36 Ray E. Omholt and Jeanette Omholt C5Q)©8 C71 4^ CO w. CO ^ 1C a OcDcoco ^ 05 OS Oi Oi
Those issues presented for our decision are as follows:2(1) The amount allowable as a deduction under section 167(a)3 on account of amounts accrued by Powerlock Systems, Inc., as royalties owing to Ray E. Omholt on account of the…
2Cases cited13 opinions
- Williams v. CommissionerUnited States Tax Court · 1957
- Hyland v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1949
- Lowe v. CommissionerUnited States Tax Court · 1965
- Fetzer Refrigerator Co. And Louisville Cooler Mfg. Co. v. United StatesCourt of Appeals for the Sixth Circuit · 1971
- Poole v. CommissionerUnited States Tax Court · 1966
8 more not listed; retrieve them via the Exa API.
3Cited by2 opinions
- Liquid Paper Corp. v. United StatesUnited States Court of Claims · 1983
- Omholt v. CommissionerUnited States Tax Court · 1973