American Properties, Inc. v. Commissioner
United States Tax Court
Held, that the activities of the corporate petitioner in constructing, maintaining, and operating racing boats did not constitute the carrying on of a trade or business, but were incident to the personal hobby of its sole stockholder, and the corporation is not entitled to deduct amounts expended by it as ordinary and necessary business expenses, or to take deductions for depreciation on the boats.
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Held, that the activities of the corporate petitioner in constructing, maintaining, and operating racing boats did not constitute the carrying on of a trade or business, but were incident to the personal hobby of its sole stockholder, and the corporation is not entitled to deduct amounts expended by it as ordinary and necessary business expenses, or to take deductions for depreciation on the boats. Held, further, that the amounts expended by the corporation are properly taxable to the individual petitioners, since such expenditures were solely for the personal benefit of the individual…
1Opinion of the Court
Atkins, Judge:
The respondent determined deficiencies in income tax and additions to the tax as follows:
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American Properties, Inc., claims that there has been an overpayment in its tax for the year 1949.
The principal issue is whether certain expenditures made by the petitioner American Properties, Inc., in 1949 and 1950 in connection with designing, constructing, and racing of speed boats constituted deductible business expenses of the corporation, or whether such expenditures constituted personal hobby expenses paid by the corporation on behalf of its stockholder, the petitioner…
2Cases cited15 opinions
- Helvering v. National Grocery Co.Supreme Court of the United States · 1938
- Higgins v. CommissionerSupreme Court of the United States · 1941
- Louis Greenspon v. Commissioner of Internal Revenue, (Three Cases). Anna Greenspon v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1956
- Poncet Davis v. United StatesCourt of Appeals for the Sixth Circuit · 1955
- Paramount-Richards Theatres, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1946
10 more not listed; retrieve them via the Exa API.
3Cited by160 opinions
- Enoch v. CommissionerUnited States Tax Court · 1972
- Challenge Mfg. Co. v. CommissionerUnited States Tax Court · 1962
- Pritchett v. CommissionerUnited States Tax Court · 1974
- Coors v. CommissionerUnited States Tax Court · 1973
- International Trading Co. v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1960
155 more not listed; retrieve them via the Exa API.