Shorb v. COMMISSIONER OF INTERNAL REVENUE, Docket No. 32219.
| Decision Date | 10 March 1931 |
| Docket Number | Docket No. 32219. |
| Citation | 22 BTA 644 |
| Parties | LOUISE GLASSELL SHORB, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Board of Tax Appeals |
D. Webster Egan, Esq., for the petitioner.
C. H. Curl, Esq., for the respondent.
This proceeding is for the redetermination of a deficiency in income tax asserted by the respondent in the amount of $7,373.73 for the year 1924. The deficiency arises from the respondent's action in including in the petitioner's income for said year the amount of $49,838.40, received by her as distributions from the Glassell Development Company.
The petitioner, a resident of Los Angeles, Calif., is and was during the year 1924, a stockholder of the Glassell Development Company, a corporation which was organized in September, 1913, for the purpose of improving, subdividing and selling real estate.
The surplus or deficit before dividend payments, profit or loss from operations, and dividends paid by the Glassell Development Company during the period December 31, 1919, to and including December 31, 1923, were as follows:
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| Surplus or (deficit) before | Dividend
| dividend payments | paid
-------------------------------------|-----------------------------|-----------
Surplus 12-31-19 ___________________ | ($102,726.44) |
Loss 1920 __________________________ | 123,383.21 |
| _____________ |
Balance 12-31-20 ___________________ | ($226,109.65) | $25,000.00
Balance 1-1-21 _____________________ | ($226,109.65 |
Loss 1921 __________________________ | 8,262.35 |
| _____________ |
Balance 12-31-21 ___________________ | ($234,372.00) | None
Balance 1-1-22 _____________________ | ($234,372.00) |
Income 1922 _____________ $36,719.67 | |
Less income tax _________ 3,557.16 | 33,162.51 | $34,106.55
__________ | _____________ |
Balance 12-31-22 ___________________ | ($201,209.49) |
Balance 1-1-23 _____________________ | ($201,209.49) |
Income 1923 _____________ $50,380.49 | |
Less Income Tax _________ 6,297.56 | 44,082.93 | $75,019.82
___________ | _____________ |
Balance 12-31-23 ___________ | ($157,126.56) |
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The deficit at December 31, 1919, resulted in its entirety from operating losses. No dividends were paid by the corporation prior to the year 1920.
At the beginning of the year 1924, the Glassell Development Company had an operating deficit of $157,126.56. Its net earnings for the year were $113,578.12, and it made distributions to its stockholders during the year in the amount of $245,382.12, of which $49,838.40 was received by the petitioner.
The respondent, upon audit of the petitioner's return of income for the year 1924, determined that the entire amount of $49,838.40 received by the petitioner in that year from the Glassell Development Company constituted taxable income to her, and that there is a deficiency in tax in the amount of $7,373.73.
The...
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