De Korse v. Commissioner
United States Tax Court
During 1939 and 1940 and until February 28, 1941, petitioners operated a tool and die manufacturing business under corporate form. On that date they dissolved the corporation and had the assets transferred to an alleged newly formed partnership composed of themselves and their wives and the minor son of petitioner Koppy. They each purportedly made gifts to their wives, and Koppy to his minor son, of a portion of their interests in the assets.
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During 1939 and 1940 and until February 28, 1941, petitioners operated a tool and die manufacturing business under corporate form. On that date they dissolved the corporation and had the assets transferred to an alleged newly formed partnership composed of themselves and their wives and the minor son of petitioner Koppy. They each purportedly made gifts to their wives, and Koppy to his minor son, of a portion of their interests in the assets. Held, that the wives and minor son were not bona fide partners in the business and that all of the income from the business for 1941 is taxable to…
1Opinion of the Court
OPINION.
Smith, Judge:
We think that the respondent correctly determined that petitioners are taxable on all of the partnership earnings. It is too plain for argument that the real purpose of petitioners in attempting to bring their wives and Arthur Koppy into the partnership was to reduce taxes on their shares of the partnership earnings. While that fact alone might not condemn their acts (Gregory v. Helvering, 293 U. S. 465), it does give point to our inquiry as to whether the arrangements which they made were genuine and of substance.
The formation of the partnership was not intended to bring…
2Cases cited18 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- Lucas v. EarlSupreme Court of the United States · 1930
- Helvering v. HorstSupreme Court of the United States · 1940
- Higgins v. SmithSupreme Court of the United States · 1940
- Corliss v. BowersSupreme Court of the United States · 1930
13 more not listed; retrieve them via the Exa API.
3Cited by26 opinions
- F. & D. Rentals, Inc. v. CommissionerUnited States Tax Court · 1965
- Apt v. BirminghamDistrict Court, N.D. Iowa · 1950
- Harris v. CommissionerUnited States Tax Court · 1948
- Allen v. CommissionerUnited States Tax Court · 1968
- Bassett v. CommissionerUnited States Tax Court · 1993
21 more not listed; retrieve them via the Exa API.