522 F2d 981 Swank Son Inc v. United States

522 F.2d 981

75-2 USTC P 9675

SWANK & SON, INC., Plaintiff-Appellee,
UNITED STATES of America, Defendant-Appellant.

No. 74-1131.

United States Court of Appeals,
Ninth Circuit.

Aug. 11, 1975.

Leonard J. Henzke, Jr., Atty. (argued), Tax Div., U. S. Dept. of Justice, Washington, D. C., for defendant-appellant.

Richard F. Gallagher (argued), Great Falls, Mont., for plaintiff-appellee.


Before KOELSCH and DUNIWAY, Circuit Judges, and MURPHY,* District Judge.


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The question on this appeal is whether the District Judge erred in concluding that the cash bonus received by Taxpayer, a small business corporation under Subchapter S of the Internal Revenue Code of 1954 (26 U.S.C. § 1371 Et seq.) and the lessor in an oil and gas lease, did not constitute "personal holding company income" under 26 U.S.C. § 1372(e)(5) as it read in 1965, and hence did not operate to terminate Taxpayer's election to be taxed as a small business corporation.


Having carefully considered the matter, we are convinced that the answer is "no" and approve and adopt the wellconsidered opinion of Judge Smith appearing in 362 F.Supp. 897 (D.Mont.1973).




The Honorable Thomas F. Murphy, Senior United States District Judge for the Southern District of New York, sitting by designation