178 F2d 913 Whitman v. Commissioner of Internal Revenue

178 F.2d 913

50-1 USTC P 9110


No. 117, Docket 21464.

United States Court of Appeals
Second Circuit.

Argued Dec. 6, 1949.
Decided Dec. 22, 1949.

Watson Washburn, New York City, for petitioner.

Theron Lamar Caudle, Ellis N. Slack, Robert N. Anderson, C. Oliphant, Washington, D.C., (Morton K. Rothschild, Washington, D.C., of counsel), for respondent.

Before L. HAND, Chief Judge, and SWAN and FRANK, Circuit Judges.

The record facts and the Tax Court's findings and decision appear in that decision as reported in 12 T.C. 324.

FRANK, Circuit Judge.

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The taxpayer, in 1943 and 1945, was not only the president and treasurer but also the holder of all but a few shares of the company's stock.1 In 1943, the company's directors, in a resolution awarding her $20,000, stated that this sum represented compensation for her services over a five-year period beginning in 1938 during which she had been paid nothing. But in 1945 the company- which obviously she dominated- in an application filed with the Salary Stabilization Unit of the United States Bureau of Internal Revenue (in order to induce that Unit to act as the company desired) specifically stated that she had been paid the $20,000 as pay for services rendered in the single year 1943. We cannot say that the Tax Court was 'clearly erroneous' in finding the facts in accordance with that 1945 statement.2 That finding supports that court's decision that taxpayer is not entitled to the benefits of Section 107(a) of the Internal Revenue Code, as amended, 26 U.S.C.A. 107(a).3




She originally owned all the 2000 shares, but had given each of her three daughters 25 shares, retaining 1925


We need not consider the findings and conclusions of the Tax Court that, in any event, the taxpayer did not receive at least 80% of the total compensation in 1943


That section reads: 'If at least 80 per centum of the total compensation for personal services covering a period of thirty-six calendar months or more (from the beginning to the completion of such services) is received or accrued in one taxable year by an individual or a partnership, the tax attributable to any part thereof which is included in the gross income of any individual shall not be greater than the aggregate of the taxes attributable to such part had it been included in the gross income of such individual ratably over that part of the period which precedes the date of such receipt or accrual.'