421 F2d 1393 Alicia Ruth Inc v. Commissioner of Internal Revenue
421 F.2d 1393
70-1 USTC P 9185
ALICIA RUTH, INC., Petitioner-Appellant,
COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
United States Court of Appeals, Fifth Circuit.
Jan. 19, 1970.
Stanley P. Kaplan, Miami, Fla., for petitioner-appellant.
Johnnie M. Walters, Asst. Atty. Gen., Lee A. Jackson, Issie L. Jenkins, Benjamin M. Parker, Harry D. Shapiro, John P. Burke, Attys., Tax Div., U.S. Dept. of Justice, K. Martin Worthy, Chief Counsel, Christopher J. Ray, Atty., I.R.S., Washington, D.C., for respondent-appellee.
Before JOHN R. BROWN, Chief Judge, and COLEMAN and CLARK, Circuit Judges.
The corporate taxpayer appeals from a decision of the Tax Court (memoranda opinion 28 T.C. M 262) disallowing as a deduction the amounts paid as alleged compensation to a fifty percent stockholder. As all of the witnesses were interested financially in the outcome of the case and there were many circumstances, doubts and uncertainties about the arrangement under which the stockholder claimed he was serving the corporation by steering customers into this Miami Beach ladies shop, the trier of fact was entitled to conclude that the amount disbursed was not compensation. Consequently, disallowing it altogether was not error. Thus no employment relationship was established.