Imler v. Commissioner
United States Tax Court
11 T.C. 836 (1948)
- Written by Matthew Celestin, JD
Facts
Joseph W. Imler (plaintiff) was a director and shareholder of Imler Supply Company (the corporation), which was in the tinning and soldering business and also leased space in seven buildings it owned. One of the buildings caught on fire, and the corporation received insurance proceeds to repair the damage. The corporation decided it was too expensive to repair the top two floors of the seven-floor building, so it instead added a new roof to the fifth floor. This left the corporation with an excess from the insurance proceeds. However, with two fewer floors, the corporation no longer had the capacity to continue its tinning and soldering business. Therefore, the corporation’s need for capital was reduced, and, although the corporation did not generally pay dividends to its shareholders, the corporation used the excess insurance proceeds to redeem some of its outstanding stock. The Commissioner of Internal Revenue (the Commissioner) (defendant) assessed a deficiency in the corporation’s income for not recognizing the distribution of the insurance proceeds as a dividend.
Rule of Law
Issue
Holding and Reasoning (Van Fossan, J.)
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