L'Esperance v. C.I.R., 070943 FEDTAX, 108814

Docket Nº:108814
Opinion Judge:Smith, Judge:
Party Name:E. J. L'ESPERANCE, Petitioner. v. COMMISSIONER OF INTERNAL REVENUE, Respondent.
Attorney:A. Calder Mackay, Esq., and Harry W. Moore, C.P.A., for the petitioner. Eugene Harpole, Esq., for the respondent.
Case Date:July 09, 1943
Court:United States Tax Court
 
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T.C.M. (P-H) P 43,336 (1943)

E. J. L'ESPERANCE, Petitioner.

v.

COMMISSIONER OF INTERNAL REVENUE, Respondent.

No. 108814

United States Tax Court

July 9, 1943

Payments held compensation rather than gifts.-

Official Tax Court Syllabus

Taxpayer was employed as branch manager for an insurance company until 1937. Upon obtaining a divorce from his wife the company requested his resignation. He resigned, waiving all rights to commissions on insurance sold and the company agreed to pay him $500 per month for life. Held, that the payments are taxable as compensation and do not constitute gifts.- Ed.

A. Calder Mackay, Esq., and Harry W. Moore, C.P.A., for the petitioner.

Eugene Harpole, Esq., for the respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

Smith, Judge:

This proceeding is for the redetermination of deficiencies in income tax and penalty for the calendar year as follows:

Year Deficiency 25% Penalty
1936 ......... $ 80.80 ....
1937 ......... 445.46 ....
1938 ......... 160.82 $40.20
1939 ......... 92.51 ....
The petitioner has alleged no error with reference to the determination of the deficiency for 1936. His only allegation of error with respect to the deficiencies determined for the years 1937, 1938, and 1939 is that the respondent erroneously included in the taxable net income of the petitioner retiring allowances received by him from the Imperial Life Assurance Co. of Canada as follows:

1937 ................ $5,000 1938 ................ 6,000 1939 ................ 6,000

FINDINGS OF FACT The petitioner is a resident of Yucaipa, California. He filed his income tax returns for the years 1936, 1937, 1938, and 1939 with the collector of internal revenue for the sixth district of California. From about 1914 through 1930 the petitioner was an employee of the Imperial Life Assurance Co. of Canada, and a resident of Canada. In 1930 he moved to Los Angeles, California, and was given a contract by the above-named Assurance Co. as branch manager of its office in Los Angeles. Under this contract he was to receive a salary of $300 per month plus certain commissions upon business written by him or by subagents and was to receive a commission upon the renewal premiums paid upon such contracts. Other...

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