321 F2d 503 Cummins Diesel Sales of Oregon Inc v. United States

321 F.2d 503

63-2 USTC P 9641

UNITED STATES of America, Appellee.
Robert H. WILLS and Lillian Wills, Appellants,
UNITED STATES of America, Appellee.

Nos. 18438, 18439.

United States Court of Appeals Ninth Circuit.

July 30, 1963.

George W. Mead, Portland, Or., for appellant.

Louis F. Obedorfer, Asst. Atty. Gen., Lee A. Jackson, Meyer Rothwacks, Crombie J. D. Garrett and Phillip Heyman, Attys., Dept. of Justice, Washington, D.C., Sidney I. Lezak, U.S. Atty., and Donal D. Sullivan, Asst. U.S. Atty., Portland, Or., for appellee.

Before ORR, MERRILL and BROWNING, Circuit Judges.

BROWNING, Circuit Judge.

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The District Court correctly stated and applied the pertinent legal principles in deciding these tax refund suits adversely to appellant taxpayers (207 F.Supp. 746 (D.Or.1962)). Indeed, appellants do not contend to the contrary.


However, appellants contend that the District Court erred in finding as matters of fact: (1) that earnings and profits of the corporate appellant were permitted to accumulate beyond the reasonable needs of its business in 1955 and 1956, and the corporate appellant was availed of for the purpose of avoiding the income tax with respect to its shareholders in these years (see 26 U.S.C.A. 532, 533); and (2) that amounts paid by the corporate appellant to an employee who performed nursing and other services for the individual appellant (the corporate appellant's president and principal stockholder) were expenditures for the personal benefit of the individual appellant and constituted a constructive dividend to him (deductible by the individual appellant as personal medical expenses to the extent permitted by law), and were not ordinary and necessary business expenses of the corporate appellant. See 26 U.S.C.A. 162(a)(1). We have examined the record and are satisfied that the findings are supported by the evidence.