Pacific Flush Tank Co. v. Commissioner

Board of Tax Appeals

Pacific Flush Tank Co. v. Commissioner

17 B.T.A. 896, 1929 BTA LEXIS 2217

CourtUnited States Board of Tax Appeals

DecidedOctober 14, 1929

DocketDocket No. 28415.

StatusPublished

Cited by1 cases

This text of 17 B.T.A. 896 (Pacific Flush Tank 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

Pacific Flush Tank Co. v. Commissioner, 17 B.T.A. 896, 1929 BTA LEXIS 2217 (bta 1929).

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Opinion

[897]*897OPINION.

Van Fossan:

Petitioner contends that the payments to Ida K. Miller under the terms of the above contract were either an ordinary and necessary expense or a loss. We find ourselves unable to catalog the item in either category.

[898]*898The payments to the widow were provided for in the contract made by the husband and the principles underlying payment to both are inextricably interwoven. As to the husband, the payment of 20 per cent of net earnings was either primarily in the nature of payment for capital assets (patents and improvements usable in petitioner’s business) and so not allowable as expense (John C. Moore Corporation, 3 B. T. A. 430) or a distribution of profits, equally unallowable (Pompeian Mfg Co., 1 B. T. A. 825). The designation of the widow as the recipient of part of the payments to be made did not alter the character of the payments. Such payments would be, nevertheless, in consideration of the services and contributions of the husband. Nor is the difficulty removed by denominating the payments as annuities.

In the alternative, petitioner contends that the payments to the widow were a loss. Before this conclusion could be reached, however, it would be necessary for petitioner to establish the value of the patents acquired, their respective terms, and the proportionate part of the payments heretofore made properly to be allocated thereto, none of which facts are before us.

Decision will be entered for the respondent.

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[897]*897OPINION.

Van Fossan:

Petitioner contends that the payments to Ida K. Miller under the terms of the above contract were either an ordinary and necessary expense or a loss. We find ourselves unable to catalog the item in either category.

[898]*898The payments to the widow were provided for in the contract made by the husband and the principles underlying payment to both are inextricably interwoven. As to the husband, the payment of 20 per cent of net earnings was either primarily in the nature of payment for capital assets (patents and improvements usable in petitioner’s business) and so not allowable as expense (John C. Moore Corporation, 3 B. T. A. 430) or a distribution of profits, equally unallowable (Pompeian Mfg Co., 1 B. T. A. 825). The designation of the widow as the recipient of part of the payments to be made did not alter the character of the payments. Such payments would be, nevertheless, in consideration of the services and contributions of the husband. Nor is the difficulty removed by denominating the payments as annuities.

In the alternative, petitioner contends that the payments to the widow were a loss. Before this conclusion could be reached, however, it would be necessary for petitioner to establish the value of the patents acquired, their respective terms, and the proportionate part of the payments heretofore made properly to be allocated thereto, none of which facts are before us.

Decision will be entered for the respondent.

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Bluebook (online)

17 B.T.A. 896, 1929 BTA LEXIS 2217, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pacific-flush-tank-co-v-commissioner-bta-1929.

Opinion

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