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Whipple v. Commissioner, 373 U.S. 193 (1963)
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General SummaryThis case is from a collection containing the full text of over 16,000 Supreme Court cases from 1793 to the present. The body of Supreme Court decisions are, effectively, the final interpretation of the Constitution. Only an amendment to the Constitution can permanently overturn an interpretation and this has happened only four times in American history.
Whipple v. Commissioner, 373 U.S. 193 (1963)
Whipple v. Commissioner No. 305 Argued March 26-27, 1963 Decided May 13, 1963 373 U.S. 193
CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
Syllabus
Petitioner organized, owned the controlling interest in, and managed several business corporations. One was a bottling company to which he sold on credit bottling equipment owned by him individually, leased a plant built by him on land which he owned individually, and made a loan to pay off other creditors. Its indebtedness to him became worthless in 1953, and he deducted it as a business bad debt in computing his 1953 taxable income. The Commissioner claimed that the debt was a nonbusiness bad debt within the meaning of § 23(k)(4) of the Internal Revenue Code of 1939, as amended in 1942, and assessed deficiencies. The Tax Court determined that petitioner was not in the business of organizing, promoting, managing or financing corporations, of bottling soft drinks, or of general financing and money lending, and it sustained the deficiency. The Court of Appeals affirmed.
Held:
1. The 1942 amendment of § 23(k) was designed to make full deductibility of a bad debt turn upon its proximate connection with activities which the tax laws recognized as a "trade or business," a concept which falls far short of reaching every income-producing or profitmaking activity. Pp. 197-201.
2. Absent substantial additional evidence, furnishing organizational, promotional, and managerial services to corporations for a reward not different from that flowing to an investor in those corporations is not a "trade or business," within the meaning of § 23(k)(4). Pp. 201-203.
3. The determinations of the Tax Court, affirmed by the Court of Appeals, that petitioner was not engaged in the business of money lending, of financing corporations, of bottling soft drinks or of any combination of these were not clearly erroneous, and they will not be disturbed by this Court. Pp. 203-204.
4. However, the loss may have been attributable to petitioner’s position as the owner and lessor of the real estate and bottling plant in which the corporation did business. Since neither of the Courts below disposed of that possibility, the case is remanded for further proceedings in the Tax Court on that question. Pp. 204-205.
301 F.2d 108, judgment vacated and cause remanded.
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Chicago: U.S. Supreme Court, "Syllabus," Whipple v. Commissioner, 373 U.S. 193 (1963) in 373 U.S. 193 373 U.S. 194. Original Sources, accessed November 24, 2024, http://originalsources.com/Document.aspx?DocID=318BLNQ2QZHXFBC.
MLA: U.S. Supreme Court. "Syllabus." Whipple v. Commissioner, 373 U.S. 193 (1963), in 373 U.S. 193, page 373 U.S. 194. Original Sources. 24 Nov. 2024. http://originalsources.com/Document.aspx?DocID=318BLNQ2QZHXFBC.
Harvard: U.S. Supreme Court, 'Syllabus' in Whipple v. Commissioner, 373 U.S. 193 (1963). cited in 1963, 373 U.S. 193, pp.373 U.S. 194. Original Sources, retrieved 24 November 2024, from http://originalsources.com/Document.aspx?DocID=318BLNQ2QZHXFBC.
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