Tauber v. Commissioner
United States Tax Court
1. Stock or Evidence of Indebtedness -- Undercapitalization -- Principal or Dividends. -- The payment of the principal of notes by a corporation may not be regarded for tax purposes as the payment of taxable dividends upon the theory that the notes represented capital of an otherwise undercapitalized corporation where the facts show no undercapitalization. 2. Burden of Proof -- Pleadings -- New Issue Pleaded by Commissioner. -- Where the Commissioner attempts to raise a new…
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1. Stock or Evidence of Indebtedness -- Undercapitalization -- Principal or Dividends. -- The payment of the principal of notes by a corporation may not be regarded for tax purposes as the payment of taxable dividends upon the theory that the notes represented capital of an otherwise undercapitalized corporation where the facts show no undercapitalization. 2. Burden of Proof -- Pleadings -- New Issue Pleaded by Commissioner. -- Where the Commissioner attempts to raise a new issue different from the theory upon which he determined the deficiency, he has the burden of pleading and of proof. 3.…
1Opinion of the Court
OPINION.
MuRdock, Judge:
The principal argument made by the Commissioner in this case is in support of his determination that the notes were actually evidence of capital contributions and the payments thereon were taxable dividends. He contends that the transfer of the assets and the receipt of the notes was not a sale, as the petitioners contend, but was a contribution of capital since otherwise there would have been capital of only $100 in relation to indebtedness of $209,453.38, in other words “thin” capital inadequate for the purposes of the business. It will be demonstrated that there was…
2Cases cited2 opinions
- Hull v. Commissioner of Internal RevenueCourt of Appeals for the Fourth Circuit · 1937
- Hibbs v. CommissionerUnited States Tax Court · 1951
3Cited by115 opinions
- Estate of Horvath v. CommissionerUnited States Tax Court · 1973
- Achiro v. CommissionerUnited States Tax Court · 1981
- McSpadden v. CommissionerUnited States Tax Court · 1968
- Papineau v. CommissionerUnited States Tax Court · 1957
- Conforte v. CommissionerUnited States Tax Court · 1980
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