Cravens v. Commissioner

Before STERNHAGEN, LANSDON, and ARUNDELL.

The taxpayer appeals from the determination of a deficiency of $85.80 in income tax for the calendar year 1921, which results from the Commissioner's addition to the gross income included by the taxpayer in his return of an amount of $1,250, shown upon the information return of the Security Savings & Loan Association to have been paid to the taxpayer during the year.

FINDINGS OF FACT.

The taxpayer, during the taxable year and for approximately 15 years prior thereto, was the president or other officer of the Security Savings & Loan Association, doing business at Salina, Kans. During all this time there was an agreement between him and the corporation, whereby he was to receive a commission upon each loan made by the corporation. For many years, until about 1919, all loans made by the association bore interest at 9 per cent. From that time forth some loans were made at less than 9 per cent. In 1921 a dispute arose under the contract as to the commissions due the taxpayer upon loans bearing interest at less than 9 per cent. For the taxable year*2709 this disputed amount was $1,250. The total amount of commissions received during this year, including the amount of $1,250 in dispute, was $3,050. In making his return for 1921, the taxpayer included only $1,800 and omitted the $1,250. The corporation on its information return of amounts paid showed that the taxpayer had received from it $3,050 as commissions. The taxpayer, as president of the corporation, had the power to take from the corporation in the first instance such monies without securing the specific approval of any of the other officers of the corporation. Upon the basis of the corporation information return, the Commissioner included the additional $1,250 in the taxpayer's taxable income and determined the deficiency here in question. Early in 1922, when the taxpayer quit the corporation, he acquiesced in its demand and repaid the amount of $1,250, together with additional amounts arising out of the years 1919 and 1920. There is no question as to the bona fides of the transaction or as to the propriety of the taxpayer's action.

DECISION.

The deficiency determined by the Commissioner is disallowed.