Garrison v. Commissioner
United States Tax Court
Petitioner Joseph Garrison was the principal stockholder-officer-employee of a corporation and received a purported $ 40,000 bonus for his services. The bonus was authorized and paid after the corporation had determined to liquidate, ceased doing business, and sold its operating assets. On audit of the corporation's return, respondent disallowed $ 15,000 of the bonus as excessive compensation and the corporation conceded the disallowance.
Read the full summary
Petitioner Joseph Garrison was the principal stockholder-officer-employee of a corporation and received a purported $ 40,000 bonus for his services. The bonus was authorized and paid after the corporation had determined to liquidate, ceased doing business, and sold its operating assets. On audit of the corporation's return, respondent disallowed $ 15,000 of the bonus as excessive compensation and the corporation conceded the disallowance. Held, on the particular facts, the $ 15,000 constituted a distribution in complete liquidation in respect of petitioner's stock within the meaning of sec.…
1Opinion of the Court
OPINION
This case presents the question whether a purported compensatory bonus payment to the principal stockholder-officer-employee of a closely held corporation in liquidation, which the respondent and the corporation subsequently agreed was excessive in part, may be treated as a distribution in liquidation and therefore entitled to capital gains treatment under section 331(a) (l).2 The precise issue herein has not been previously litigated.
Petitioner Joseph Garrison was the principal stockholder, officer, and employee of Produce. By the taxable year involved, Produce had ceased doing…
2Cases cited34 opinions
- Higgins v. SmithSupreme Court of the United States · 1940
- North American Oil Consolidated v. BurnetSupreme Court of the United States · 1932
- Automobile Club of Mich. v. CommissionerSupreme Court of the United States · 1957
- Healy v. CommissionerSupreme Court of the United States · 1953
- Flanagan v. HelveringCourt of Appeals for the D.C. Circuit · 1940
29 more not listed; retrieve them via the Exa API.
3Cited by6 opinions
- Kennedy v. CommissionerUnited States Tax Court · 1979
- Charles O. Finley & Co. v. CommissionerUnited States Tax Court · 1982
- Garrison v. CommissionerUnited States Tax Court · 1969
- Helstoski v. Comm'rUnited States Tax Court · 1990
- Kennedy v. CommissionerUnited States Tax Court · 1979
1 more not listed; retrieve them via the Exa API.