Ottolander v. Commissioner

*651 The Commissioner asserts a deficiency in income tax for the year 1920 in the amount of $184.25. The only issue is whether the petitioner was a partner in a certain partnership during the taxable year.

FINDINGS OF FACT.

The petitioner was employed by the F and F Nurseries, a partnership, with its main offices at Springfield, N.J., during the taxable year. His contract for compensation provided for a stated salary $200of per month and a cash bonus of one-sixth of the cash profits. He had no capital investment in the F and F Nurseries. In his income-tax return for 1920, under Schedule B - Income from Salaries, Wages, Commissions, Bonuses, Director's Fees, and Pensions, the petitioner listed*2824 two items of income, viz, F F and G Nurseries, Springfield, N.J., $2,400 on the first line and, on the line below, share of profits, $5,798.48. He listed no income under Schedule C - Income from Partnerships, Personal Service Corporations and Fiduciaries.

Upon audit of the accounts and income-tax returns of the F and F Nurseries for the year 1920, the Commissioner increased the income of such partnership in an amount in excess of $10,000, held that the petitioner's share of such increase was $1,674.96, and determined the deficiency here in controversy.

OPINION.

LANSDON: The contract of employment between the petitioner and the F and F Nurseries was oral and was to the effect that the petitioner *652 should receive for his services as office and sales manager a stated salary of $200 a month and, in addition thereto, a bonus or extra compensation equal to one-sixth of the cash profits of the employer.

We are convinced that the petitioner was not a member of the partnership operating the F and F Nurseries and was not entitled to receive any part of the distributive net earnings of such partnership. The petitioner testified that neither in the taxable year*2825 nor at any subsequent time did he receive any payment on account of the additional profits which the Commissioner has determined were earned by the partnership in 1920. From this evidence, which was not rebutted in any way, we conclude that the additional income upon which this deficiency is based was neither received nor accrued by the petitioner in the taxable year.

Judgment will be entered for the petitioner.

GREEN and STERNHAGEN not participating.