Seven-Up Co. v. Commissioner
United States Tax Court
14 T.C. 965 (1950)
- Written by Abby Roughton, JD
Facts
Seven-Up Company (plaintiff) was a national soft-drink company that franchised local bottlers to make Seven-Up’s drink using a patented concentrate. During World War II, newsprint shortages and other wartime restrictions made advertising difficult for the bottlers, so Seven-Up agreed to run national advertisements for the bottlers. Seven-Up collected funds from the bottlers to use for the advertising and excluded those funds from its income. The Commissioner of Internal Revenue (the commissioner) (defendant) asserted that Seven-Up’s treatment of the bottler’s funds was improper. The commissioner said that Seven-Up should have included the bottlers’ funds in its gross income and then taken deductions for the amounts spent on advertising. Seven-Up challenged the commissioner’s determination in United States Tax Court.
Rule of Law
Issue
Holding and Reasoning (Johnson, J.)
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