Ferguson v. Commissioner

26 T.C.M. 168, 1967 Tax Ct. Memo LEXIS 232

Opinion

Joseph B. Ferguson v. Commissioner.

Ferguson v. Commissioner

Docket No. 92137.

United States Tax Court

1967 Tax Ct. Memo LEXIS 232; 26 T.C.M. (CCH) 168;

February 16, 1967

---

---

Order

On November 15, 1966, the petitioner filed motions (1) for Further Findings of Fact; (2) for Reconsideration; and (3) for Further Trial; which were thereafter set down for hearing on January 18, 1967. The parties appeared at said hearing by counsel and the Court having heard the statements and arguments of counsel, having taken such motions under advisement, having considered said motions, and having reviewed the files and record herein, and our Opinion filed October 17, 1966, and having also considered respondent's Motion for Further Findings of Fact filed herein on February 8, 1967, subsequent to the hearing on petitioner's motions, and now being fully advised -

FINDS: That petitioner has failed to state grounds, present evidence or make a showing that he is entitled to further trial herein or reconsideration by the Court; that the $75,000 paid directly to 444 West 55th Street Corporation and the $57,592.57 paid to the Experimental Department by Imported in 1959 was compensation for the use and occupancy of 444's buildings and therefore rental income to 444. It is, therefore,

ORDERED: That the Opinion filed herein, 47 T.C. No. 3 (Oct. 17, 1966), be and the same hereby is amended and revised accordingly, and the paragraph beginning on the next to the last line on page 45 of our mimeographed Opinion herein and continuing on page 46 thereof, be deleted and the following paragraph be substituted therefor, as follows:

Likewise, the other $57,592.57 paid during 1959 by Imported under the 1958 agreement was rent income to 444 and a constructive dividend to petitioner because it was made for the use and occupancy of 444's building. Since we have held that the experimental department was owned by petitioner, the entire $57,592.57 paid to it is also income to petitioner. We agree with respondent that the payments were in substance rent income to 444; 444's earnings and profits would be increased by the amount thereof, thus supporting constructive dividend treatment in the same amount within the limitations of section 316(a)(2), Internal Revenue Code of 1954. Accordingly, we hold that petitioner realized unreported taxable income from constructive dividends in the total amount of $130,712.09 in 1959 as a result of the payments by Imported under the terms of the 1958 agreement.

It is

FURTHER ORDERED: That petitioner's additional motions filed herein for further trial and reconsideration, be and the same hereby are denied.