Levey v. Helvering
| Decision Date | 04 December 1933 |
| Docket Number | No. 5891.,5891. |
| Parties | LEVEY v. HELVERING, Com'r of Internal Revenue. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
W. W. Ross and Richard S. Doyle, both of Washington, D. C., for petitioner.
G. A. Youngquist, Sewall Key, John G. Remey, C. M. Charest, C. A. Ray, and Shelby S. Faulkner, all of Washington, D. C., for respondent.
Before MARTIN, Chief Justice, and ROBB, HITZ, and GRONER, Associate Justices.
The single question presented on this petition is whether a certain sum of money received by petitioner from his employer, the Frederick H. Levey Company, Inc., during the year 1928, was "compensation" or a "gift." The Commissioner held it was compensation for services rendered and was taxable. Sections 212 and 213, Revenue Act 1926, 44 Stat. 23 (26 USCA §§ 953, 954); Revenue Act 1928, §§ 212, 213, 45 Stat. 791 (26 USCA §§ 2212, 2213). The Board sustained the Commissioner.
The Levey Company was a New York corporation. Petitioner was for many years its secretary-treasurer, and for 1928 the chairman of its board of directors and also its treasurer. While treasurer, his salary was fixed at $30,000 annually. As chairman of the board and treasurer, his salary was fixed at $70,000. On these amounts received by him in the several years respectively he paid the tax. But the record shows that for all the years 1924 to 1930, inclusive, the corporation, in fixing at the beginning of the year the compensation of its five principal officers, adopted at the same time the following resolution: "Further resolved, That the Frederick H. Levey Company, Inc., pay to the chairman of the board, the president, the two vice presidents, and the secretary and treasurer, five officers in all, the amount their salaries caused them to pay a Federal and State income tax for year the year named was that preceding the passage of the resolution, this as a gift from the company, and not as an extra compensation for services rendered." For the years 1927 and 1928 the corporation in computing its net income did not claim as expenses or deductions the items referred to in the resolution as gifts. Petitioner and the other officers duly received the amounts payable to them under the resolution, and the amount so received by each of the officers was the amount of income tax paid by him to the state and federal governments on the salary received from the corporation. Petitioner has sought a review of the decision of the Board, and the basis of his claim here is that when a corporation, acting through its board of directors and stockholders, declares its intention of making a gift to one of its officers and includes the amount in its own taxable income instead of deducting it as an expense, the payment cannot be construed as compensation, especially where the officer has previously duly received all of the compensation to which he was entitled. The Commissioner, on the other hand, contends that the question is foreclosed by the decision of the Supreme Court in Old Colony Trust Co. v. Commissioner, 279 U. S. 716, 49 S. Ct. 499, 73 L. Ed. 918.
In that case the directors of American Woolen Company had adopted the following resolution (see page 719 of 279 U. S., 49 S. Ct. 499, 500): "Voted: That this company pay any and all income taxes, State and Federal, that may hereafter become due and payable upon the salaries of all the officers of the company, including * * * to the end that said persons and officers shall receive their salaries or other compensation in full without deduction on account of income taxes, State or Federal, which taxes are to be paid out of the treasury of this corporation." The Supreme Court held that under this resolution the payment of the tax by the employer was in consideration of services rendered by the employee, was additional compensation, and was taxable to the person receiving it. The difference in that case and this grows solely out of the fact that there the agreement on the part of the company to pay the taxes was made at the beginning of the year and before the services were rendered by the employee, whereas here the...
To continue reading
Request your trial
-
Flood v. United States
...1926, 15 F.2d 669; Weagant v. Bowers, 2 Cir., 1932, 57 F.2d 679; Fisher v. Commissioner, 2 Cir., 1932, 59 F.2d 192; Levey v. Helvering, 1933, 62 App.D.C. 354, 68 F.2d 401; Botchford v. Commissioner, 9 Cir., 1936, 81 F.2d 914; Poorman v. Commissioner, 9 Cir., 131 F.2d 946, decided Dec. 4, 19......
-
Hawke v. Commissioner of Internal Revenue
...the taxpayer that the interpretation that the parties place upon the transaction is not conclusive. In Levey v. Helvering, Commissioner, C. App.D.C., 1933, 62 App.D.C. 354, 68 F.2d 401, the court had under consideration certain payments made by a corporation to its officers. The resolution ......
-
Jackson v. Comm'r of Internal Revenue
...on his books to salary or operating expense, there is a particularly strong indication that a gift was not intended. Levey v. Helvering, (C.A., D.C.) 68 F.2d 401, affirming 26 B.T.A. 889; Willkie v. Commissioner, supra; Botchford v. Commissioner, (C.A. 9) 81 F.2d 914, 916, affirming 29 B.T.......
-
Walker v. Comm'r of Internal Revenue
...or has been deducted as an expense on the payor's income tax return, there is strong indication that a gift was not intended. Levy v. Helvering, 68 F.2d 401, affirming 26 B.T.A. 889; Botchford v. Commissioner, 81 F.2d 914, 916, affirming 29 B.T.A. 656; Wilkie v. Commissioner, supra. See als......