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Commissioner v. Bollinger, 485 U.S. 340 (1988)
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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.
Commissioner v. Bollinger, 485 U.S. 340 (1988)
Commissioner of Internal Revenue v. Bollinger No. 86-1672 Argued January 13, 1988 Decided March 22, 1988 485 U.S. 340
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE SIXTH CIRCUIT
Syllabus
Because Kentucky’s usury law limited the annual interest rate for noncorporate borrowers, lenders willing to provide money only at higher rates required such borrowers to use a corporate nominee as the nominal debtor and record titleholder of mortgaged property. Accordingly, respondents, who formed a series of partnerships to develop Kentucky apartment complexes, in each instance entered into an agreement with a corporation wholly owned by respondent Bollinger, which provided that the corporation would hold title to the property as the partnership’s nominee and agent solely to secure financing, that the partnership would have sole control of and responsibility for the complex, and that the partnership was the principal and owner of the property during financing, construction, and operation. All parties who had contact with the complexes, including lenders, contractors, managers, employees, and tenants, regarded the partnerships as the owners and knew that the corporation was merely the partnerships’ agent, if they were aware of the corporation at all. Income and losses from the complexes were reported on the partnerships’ tax returns, and respondents reported their distributive share of the income and losses on their individual returns. Although the Commissioner of Internal Revenue disallowed respondents’ losses on the ground that they were attributable to the corporation as the owner of the property, the Tax Court held that the corporation was the partnerships’ agent, and should therefore be disregarded for tax purposes, and the Court of Appeals affirmed.
Held: The partnerships were the owners of the complexes for federal income tax purposes, since in each instance the relationship between them and the corporation was, in both form and substance, an agency with the partnership as principal. It is reasonable for the Commissioner to demand unequivocal evidence of an agency relationship’s genuineness in the corporation-shareholder context in order to prevent tax evasion. However, there is no merit to the Commissioner’s contention that National Carbide Corp. v. Commissioner, 336 U.S. 422, requires such evidence to include arm’s-length dealing between principal and agent and the payment of an agency fee. The genuineness of an agency is adequately assured, where, as here, the fact that the corporation is acting as its shareholders’ agent with respect to a particular asset is set forth in a written agreement at the time the asset is acquired, the corporation functions as agent and not principal with respect to the asset for all purposes, and the corporation is held out as the agent, and not the principal, in all dealings with third parties relating to the asset. Pp. 344-349.
807 F.2d 65, affirmed.
SCALIA, J., delivered the opinion of the Court, in which all other Members joined, except KENNEDY, J., who took no part in the consideration or decision of the case.
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Chicago: U.S. Supreme Court, "Syllabus," Commissioner v. Bollinger, 485 U.S. 340 (1988) in 485 U.S. 340 485 U.S. 341. Original Sources, accessed November 24, 2024, http://originalsources.com/Document.aspx?DocID=NVLFCS4UX4QGWAT.
MLA: U.S. Supreme Court. "Syllabus." Commissioner v. Bollinger, 485 U.S. 340 (1988), in 485 U.S. 340, page 485 U.S. 341. Original Sources. 24 Nov. 2024. http://originalsources.com/Document.aspx?DocID=NVLFCS4UX4QGWAT.
Harvard: U.S. Supreme Court, 'Syllabus' in Commissioner v. Bollinger, 485 U.S. 340 (1988). cited in 1988, 485 U.S. 340, pp.485 U.S. 341. Original Sources, retrieved 24 November 2024, from http://originalsources.com/Document.aspx?DocID=NVLFCS4UX4QGWAT.
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