Thomas v. Commissioner of Internal Revenue
| Decision Date | 05 May 1943 |
| Docket Number | 10504.,No. 10503,10503 |
| Citation | 135 F.2d 378 |
| Parties | THOMAS v. COMMISSIONER OF INTERNAL REVENUE. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Ed. J. deVerges, of New Orleans, La., for petitioners.
Ray A. Brown and Sewall Key, Sp. Assts. to Atty. Gen., Samuel O. Clark, Jr., Asst. Atty. Gen., and J. P. Wenchel, Chief Counsel, Bureau of Internal Revenue, and Rollin H. Transue, Sp. Atty., Bureau of Internal Revenue, both of Washington, D. C., for respondent.
Before SIBLEY, McCORD, and WALLER, Circuit Judges.
The petitions are for review of decisions of the Board of Tax Appeals sustaining the Commissioner's determination of income tax deficiencies for the year 1936 against James Thomas and his wife, Rosalie Segari Thomas.
In 1936 the Louisiana Culvert Company, Inc., paid, in the form of a gift, to its secretary-manager, James Thomas, the sum of $25,000 which the Board determined in its findings of fact to be compensation for services rendered and not a gift; and that James Thomas and his wife, who resided in Louisiana and reported their income on the community basis, should have included said amount in their 1936 returns as taxable income.
The same questions of fact and law are involved in the petition for review of Mrs. Rosalie Segari Thomas, No. 10504, as are involved in the petition of James Thomas, No. 10503. The parties stipulated that the cases should be consolidated on appeal and that the judgment entered on the petition of Mr. Thomas should control the judgment to be entered on the petition of Mrs. Thomas.
The company employed Mr. Thomas (hereinafter referred to as "the Petitioner") on a salary plus commission basis. Early in 1936 an agent of the Bureau of Internal Revenue informally advised the Petitioner and the company accountant that the Bureau would not allow a deduction of more than $15,000 for salary and commissions paid to an executive of the company. Some time in October, 1936, an accountant of the company brought to the attention of the Petitioner that the total of salary and commission for the fiscal year 1936 already paid to him amounted to $26,302.71, thereby exceeding the $15,000 limit by $11,302.71. Petitioner instructed the accountant to adjust his salary-commission account to conform to the limit set by the agent of the Bureau.
On October 30, 1936, at a meeting of the board of directors of the company, it was voted that the commission agreement of Petitioner be canceled for the past fiscal year and that the taxpayer be placed on a flat salary basis of $15,000 a year. This cancellation was carried out on the books of the company, resulting in an overdraft on Petitioner's personal account of the $11,302.71 excess.
On November 21, 1936, the stockholders and directors of the company instructed and directed its board of directors "to pay or credit the account of James Thomas, on the books of this corporation, with the sum of Twenty-five Thousand ($25,000) Dollars, as a gift in recognition of his able and...
To continue reading
Request your trial
-
Burke v. Mesta Mach. Co.
...D.C., 52 F.Supp. 138, 141; Bass v. Hawley, 5 Cir., 62 F.2d 721; Willkie v. Commissioner, 6 Cir., 127 F.2d 953; Thomas v. Commissioner, 5 Cir., 135 F.2d 378. As Congress left the "regular rate" of pay undefined, I feel sure the purpose was to require judicial determination as to whether in f......
-
Frank v. United States
...about the payments to Frank and Cohn as "gifts" is not controlling. The transfer still may be compensatory. Thomas v. Commissioner of Internal Revenue, 135 F.2d 378 (5th Cir. 1943); Merten's Law of Federal Income Taxation, § 6.03, Chap. 6, p. 12. See also Gaugler v. United States, 312 F.2d ......
-
Wallace v. Commissioner of Internal Revenue
...a gift. We have little to add to the Tax Court's able discussion of the authorities supporting these principles. Thomas v. Commissioner of Internal Revenue, 5 Cir., 135 F.2d 378; Carragan v. Commissioner of Internal Revenue, 2 Cir., 197 F.2d 246; Nickelsburg v. Commissioner of Internal Reve......
-
Lengsfield v. Commissioner of Internal Revenue
...2 Cir., 144 F.2d 41, certiorari denied 323 U.S. 783, 65 S.Ct. 272, 89 L.Ed. 625; Limericks, Inc., v. Commissioner, supra; Thomas v. Commissioner, 5 Cir., 135 F. 2d 378; United States v. United States Gypsum Co., 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746, rehearing denied 333 U.S. 869, 68 S.C......