Joy Mfg. Co. v. Commissioner
United States Tax Court
1. Income -- Accrual -- Fees -- Prior Commitment as to Use. -- Fees, which a wholly owned subsidiary agreed to pay to its parent for services, did not cease to be income to the parent on an accrual basis after the parent, in order to strengthen the credit of the subsidiary and to give it more capital, agreed to invest the fees, up to a stated amount, in capital stock of the subsidiary. 2. Income -- Accrual -- Fees -- Collectibility. -- There was no reason during the taxable…
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1. Income -- Accrual -- Fees -- Prior Commitment as to Use. -- Fees, which a wholly owned subsidiary agreed to pay to its parent for services, did not cease to be income to the parent on an accrual basis after the parent, in order to strengthen the credit of the subsidiary and to give it more capital, agreed to invest the fees, up to a stated amount, in capital stock of the subsidiary. 2. Income -- Accrual -- Fees -- Collectibility. -- There was no reason during the taxable years to doubt the ability of the subsidiary to pay the fees because of poor financial condition or business prospects.
1Opinion of the Court
OPINION.
Murdock, Judge:
The petitioner tries unsuccessfully to explain that “ ‘engineering fees’ is a misnomer,” they were “not actually fees” but only a “formula” to determine the appropriate number of shares of J-S stock to be issued to the petitioner which “was only entitled to stock, not money” and “hence petitioner had no taxable income based on such engineering fees.” It then tries to shift the question of taxable income to the issuance of the stock, saying that the rule applicable here is that of Eisner v. Macomber, 252 U. S. 189, which stands “for the proposition that taxable income…
2Cases cited6 opinions
- Eisner v. MacOmberSupreme Court of the United States · 1920
- Helvering v. HorstSupreme Court of the United States · 1940
- United States v. AndersonSupreme Court of the United States · 1926
- Spring City Foundry Co. v. CommissionerSupreme Court of the United States · 1934
- Daggitt v. CommissionerUnited States Tax Court · 1954
1 more not listed; retrieve them via the Exa API.
3Cited by1 opinion
- Joy Mfg. Co. v. CommissionerUnited States Tax Court · 1955