Frank v. Commissioner of Internal Revenue, 12386.
| Decision Date | 28 October 1955 |
| Docket Number | No. 12386.,12386. |
| Citation | 226 F.2d 600 |
| Parties | Joseph FRANK, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Frank E. Wood, Jr., Nichols, Wood, Marx & Ginter, Cincinnati, Ohio, for petitioner.
Grant W. Wiprud, Washington, D. C., H. Brian Holland, Ellis N. Slack, Washington, D. C., on the brief, for respondent.
Before SIMONS, Chief Judge, and ALLEN and MARTIN, Circuit Judges.
Petitioner, who was an employee of The Interstate Folding Box Company, and for many years its secretary and principal accountant, resigned in 1946 after a sharp disagreement with Interstate's president. He owned 100 shares of stock in the company, which he was required on resignation to sell back to Interstate. In settlement of all claims against Interstate, including the amount paid for his stock and all bonuses and salary due him, he received the sum of $50,641.30 in three payments, one a check dated December 28, 1946, in the amount of $18,701.02 which bore the words "Stock Purchase"; another check dated December 28, 1946, in the amount of $15,313.85 bearing the notation "On Account Bonus $18,905.99, Less: Withholding Tax $3,592.14, Net $15,313.85;" and a third check dated January 3, 1947, in the amount of $10,557.78 bearing the notation "In full payment of all claims $13,034.29, Less: Withholding Tax $2,476.51, Net $10,557.78." Petitioner protested the deduction of the withholding tax, but he signed two releases relinquishing all of his claims against Interstate. On Interstate's books the amount of the first check, $18,701.02, was charged against surplus as the amount paid for petitioner's stock. The balance, $31,940.28, was charged to administrative expenses as covering the bonus and was credited to petitioner's salary account.
In his income tax return for 1946 petitioner reported the sale of his stock for $18,710 and calculated "the gain realized" as $8,710. He computed the taxable gain as $4,355. $10,000 of the amount of the second check, $18,905.99, he reported as due him for damages arising out of an assault, thus being an item non-taxable under Section 22(b) (5) Internal Revenue Code, 26 U.S.C.A. (I.R.C.1939) § 22 (b) (5). The balance of the second check, $8,905.99, he returned as ordinary income listed as "Bonus due me." The final payment he included in ordinary income for 1947. The Commissioner determined that the item of $10,000 should not have been excluded and that the sum of $13,034.29 returned in 1947 should have been returned for taxes in 1946 under the doctrine of constructive receipt. He therefore determined a deficiency against petitioner for the year 1946 in the amount of $12,221.52.
In this court petitioner has abandoned his...
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