Commissioner v. Giannini case brief
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129 F.2d 638 (9th Cir. 1942)
CASE SYNOPSIS: Petitioner Commissioner
of Internal Revenue sought review of a decision of the United States
Board of Tax Appeals (board), which held that there was no deficiency
in respondent taxpayer's federal income tax for the year 1928. The
commissioner had assessed a deficiency against the taxpayer in the
amount of $ 137,344.
FACTS: After the taxpayer performed his services for 6 years without compensation, the corporation elected to compensate the taxpayer at a rate of 5 percent of the corporation's net profits each year, with a guaranteed minimum of $ 100,000 per year. When the taxpayer learned in 1927 that he would receive $ 445,704 as compensation through July 1927, he informed the board of directors that he would not accept any further compensation for 1927. The corporation then passed a resolution to contribute $ 1,500,000, which was the estimated amount of five percent of the corporation's net profits for 1927, to a university. The taxpayer personally covered the deficiency in the corporation's contribution to the university. The commissioner then assessed a deficiency in the taxpayer's federal income taxes for 1928, as he had failed to report any part of the corporation's payment to the university. The board held that there was no deficiency in respondent taxpayer's federal income tax for the year 1928. The court affirmed the board's judgment.
HOLDING:
The court held that the board's findings were supported by the evidence, as the taxpayer did not receive the money and he did not direct its disposition.
CONCLUSION: The court affirmed the board's findings that there was no deficiency in the taxpayer's federal income tax for the year 1928.
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FACTS: After the taxpayer performed his services for 6 years without compensation, the corporation elected to compensate the taxpayer at a rate of 5 percent of the corporation's net profits each year, with a guaranteed minimum of $ 100,000 per year. When the taxpayer learned in 1927 that he would receive $ 445,704 as compensation through July 1927, he informed the board of directors that he would not accept any further compensation for 1927. The corporation then passed a resolution to contribute $ 1,500,000, which was the estimated amount of five percent of the corporation's net profits for 1927, to a university. The taxpayer personally covered the deficiency in the corporation's contribution to the university. The commissioner then assessed a deficiency in the taxpayer's federal income taxes for 1928, as he had failed to report any part of the corporation's payment to the university. The board held that there was no deficiency in respondent taxpayer's federal income tax for the year 1928. The court affirmed the board's judgment.
HOLDING:
The court held that the board's findings were supported by the evidence, as the taxpayer did not receive the money and he did not direct its disposition.
CONCLUSION: The court affirmed the board's findings that there was no deficiency in the taxpayer's federal income tax for the year 1928.
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