International Freighting Corporation, Inc. v. Commissioner case brief

 International Freighting Corporation, Inc. v. Commissioner case brief

135 F.2d 310,1943 U.S. App. 3268, 43-1 U.S. Tax Cas. (CCH) P9334; 30 A.F.T.R. (P-H) 1433

CASE SYNOPSIS: Petitioner freight corporation challenged a decision of the Tax Court of the United States determining that petitioner's delivery of shares to its employees as additional reasonable compensation was a taxable gain.

FACTS: Petitioner freight corporation delivered shares to its employees in 1936 as an additional reasonable compensation for past services actually rendered. The shares were disposed of for a valid consideration equal at least to the market value of the shares when delivered. The tax court determined that delivery of the shares resulted in a taxable gain to petitioner.

ANALYSIS:

On appeal, the court affirmed, noting that delivery of the shares was not a gift, the value of shares could not be deducted as an expense, and that the employees as donees would not be obliged to pay an income tax on what each received.

CONCLUSION: The court affirmed the tax court's determination that petitioner freight corporation's delivery of shares to its employees as additional reasonable compensation was a taxable gain.

 
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