Forty-Four Cigar Co. v. Commissioner

Board of Tax Appeals

Forty-Four Cigar Co. v. Commissioner

2 B.T.A. 1156, 1925 BTA LEXIS 2134

CourtUnited States Board of Tax Appeals

DecidedNovember 4, 1925

DocketDocket No. 1405.

StatusPublished

Cited by1 cases

This text of 2 B.T.A. 1156 (Forty-Four Cigar Co. v. Commissioner) is published on Counsel Stack Legal Research, covering United States Board of Tax Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Forty-Four Cigar Co. v. Commissioner, 2 B.T.A. 1156, 1925 BTA LEXIS 2134 (bta 1925).

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Opinion

[1158]*1158ORINION.

Ivins:

In final analysis, the money and credit of the corporation were paid out for the purpose of settling disagreement in the family of the president of the company, who owned practically all of the stock. To be sure, it was done with the consent and upon the recommendation of the minority stockholders and officers, who feared that if it were not done the company would be ruined. The transaction amounted to a withdrawal of corporate assets and their use for the personal benefit of the president and principal stockholder. The facts are that the president had insufficient means, except by using the assets of the corporation, to enable him to induce his relative to cease his pernicious activities. That those activities, if continued, would probably have resulted in the ruin of the corporation’s business does not, in our opinion, render the payments a loss to or an ordinary and necessary business expense of the corporation, or deprive them of their essential character as personal expenditures of its president.

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[1158]*1158ORINION.

Ivins:

In final analysis, the money and credit of the corporation were paid out for the purpose of settling disagreement in the family of the president of the company, who owned practically all of the stock. To be sure, it was done with the consent and upon the recommendation of the minority stockholders and officers, who feared that if it were not done the company would be ruined. The transaction amounted to a withdrawal of corporate assets and their use for the personal benefit of the president and principal stockholder. The facts are that the president had insufficient means, except by using the assets of the corporation, to enable him to induce his relative to cease his pernicious activities. That those activities, if continued, would probably have resulted in the ruin of the corporation’s business does not, in our opinion, render the payments a loss to or an ordinary and necessary business expense of the corporation, or deprive them of their essential character as personal expenditures of its president.

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Bluebook (online)

2 B.T.A. 1156, 1925 BTA LEXIS 2134, Counsel Stack Legal Research, https://law.counselstack.com/opinion/forty-four-cigar-co-v-commissioner-bta-1925.

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