Logourl black
From our private database of 14,200+ case briefs...

Harolds Club v. Commissioner

United States Court of Appeals for the Ninth Circuit
340 F.2d 861 (1965)


Facts

Raymond I. Smith (plaintiff) owned and operated an illegal gaming establishment in California that later moved to Nevada. The gaming establishment was established in Nevada as Harolds Club (Club). Smith’s two sons wholly owned the Club. In 1935, Smith agreed to manage the Club for a salary and bonus. In 1941, Smith and his sons decided to enter a fixed percentage arrangement. Smith suggested that he should receive 20 percent of the profits, since Smith was the “brains” of the organization. The sons agreed. From 1952–1956, Smith’s salary ranged from $350,000 to $560,000. The Club deducted this amount as a reasonable salary. The Commissioner (defendant) determined that the Club could not deduct the full value of Smith’s salary. At the Tax Court, competing gaming establishments testified that Smith’s salary was reasonable. The Tax Court ruled in favor of the Commissioner.

Rule of Law

Issue

Holding and Reasoning (Hamley, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.

  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.

Here's why 236,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 14,200 briefs, keyed to 189 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.