Commissioner of Int. Rev. v. Cecil B. De Mille Productions, 8144.
| Decision Date | 16 April 1937 |
| Docket Number | No. 8144.,8144. |
| Parties | COMMISSIONER OF INTERNAL REVENUE v. CECIL B. DE MILLE PRODUCTIONS, Inc. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Robert H. Jackson, Asst. Atty. Gen., and Sewall Key, Thurman Arnold, and Carlton Fox, Sp. Assts. to Atty. Gen., and James D. Head and Charles E. Lowery, Sp. Attys., Bureau of Internal Revenue, both of Washington, D. C., for petitioner.
Neil S. McCarthy and A. Calder Mackay, both of Los Angeles, Cal. (Thomas R. Dempsey, Earl L. Banta, and Howard W. Reynolds, all of Los Angeles, Cal., of counsel), for respondent.
Before WILBUR, MATHEWS, and HANEY, Circuit Judges.
Petitioner has petitioned this court to review a decision of the Board of Tax Appeals determining that respondent was not liable for a deficiency in its tax returns for the years 1924 to 1929, inclusive.
Extended statement of facts is unnecessary. Cecil B. De Mille in 1913 joined three other men in organizing Lasky Feature Play Company. After formation the duty of Cecil B. De Mille was to produce pictures. The company prospered and later merged with other picture concerns to form Famous Players-Lasky Corporation. With the latter company De Mille's duties, generally, were the direction and production of pictures. Friction arose in the organization and De Mille in 1920 formed a partnership consisting of himself and three others. The partnership made pictures, and the earnings of the firm were used in making investments.
In 1922 the members of the firm organized a corporation, respondent herein, and conveyed the assets of the partnership to it in return for stock in respondent. The earnings of respondent were allowed to accumulate, as the Board stated "so that the company might be able to produce its own pictures."
The Revenue Act of 1924 (43 Stat. 277) provides:
The Revenue Acts of 1926 and 1928 contain substantially identical provisions (44 Stat. 34, § 220 and 45 Stat. 814, § 104 (26 U.S.C.A. § 104 note).
Petitioner asserted a deficiency in respondent's tax, based upon the above statute. The surplus of respondent and the deficiencies asserted by petitioner for the years in question are as follows:
Year Surplus Deficiency
1924 $ 309,366.66 $ 95,956.06
1925 708,730.14 239,206.30
1926 1,136,129.30 275,632.56
1927 1,239,403.97 84,050.73
1928 1,568,477.56 477,056.45
1929 1,606,515.33 35,157.09
Respondent petitioned the Board to redetermine the liability. The Board found: ...
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