Alterman Foods, Inc. v. United States
United States Court of Claims
611 F.2d 866 (1979)
Alterman Foods, Inc. (plaintiff) owned and had management agreements with 57 subsidiaries that operated retail grocery supermarkets. The management agreements provided that the subsidiaries pay all gross receipts to Alterman Foods, which would then deduct its management fees. The remainder, called net advances, was treated as accounts payable on Alterman Foods’ books and tax returns. The management agreements provided for periodic accountings between Alterman Foods and its subsidiaries. The Internal Revenue Service (United States) (defendant) assessed income taxes against Alterman Foods for the net advances, treating them as constructive dividends. Alterman Foods paid the assessment and sued for a refund, contending that the net advances were loans to it from its subsidiaries. There was no evidence that the subsidiaries could demand repayment of the loans. The trial court denied the refund, and Alterman Foods appealed.
Rule of Law
Holding and Reasoning (Per curiam)
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