Law Commons^™

Taxation-Federal Income Tax-Limited Deductibility Of Entertainment Expenses, David W. Belin S.Ed.

Michigan Law Review

In the sophisticated commercial world of today there are many expenses that might be termed of a "mixed complexion," having elements of both a business and non-business character. Nowhere is this better exemplified than in the area of entertainment expenses. Though one may assume that it should be the policy of the courts to allow full and fair deduction of business expenses in general, many difficulties arise regarding expenditures for entertainment purposes. In virtually all entertainment there is personal enjoyment of a social nature by the taxpayer as well as potential business value. Furthermore, what business value there is will …

Taxation-Federal Income Tax-Deductibility Of Contributions To Profit-Sharing Trusts, W. H. Bates S.Ed.

Michigan Law Review

Plaintiff corporation set up a profit sharing trust for the benefit of its employees as authorized under section 165(a) of the Internal Revenue Code. The plan for the trust, as approved by the Treasury, provided that plaintiff should contribute annually an amount equal to 15 % of net income, as defined, not to exceed 15% of basic salary or wages of all eligible participating employees. For the tax year 1944 plaintiff claimed deductions under section 23(p)(1)(C) for an amount equal to 15% of the total participating payroll, which is actually the allowable maximum, but which in this case exceeded 15% …

Taxation-The Lincoln Electric Question: Must "Ordinary And Necessary" Business Expenses Be Also "Reasonable" In Amount, R. Lawrence Storms S. Ed.

Michigan Law Review

The United States Court of Appeals for the Sixth Circuit has recently determined in Commissioner v. Lincoln Electric Co. that the element of reasonableness is inherent in the phrase "ordinary and necessary" as used in the paragraph of the Internal Revenue Code authorizing deductions for business expenses. It will be of interest to develop the history of the case throughout its ten years of litigation, to examine some of the collateral points raised, and to attempt a critique of the merits of the court's position.

Significant Developments In The Law Of Federal Taxation, 1941-1947: Ii, Paul G. Kauper

Michigan Law Review

The 1941 Revenue Act carried forward the rather complex normal tax structure prescribed by the 1940 Revenue Act and in addition introduced a corporate surtax rate schedule. The normal tax rates were increased to absorb the 10% defense tax previously imposed as a separate tax and also a very slight increase in the rates applicable to corporations with a normal-tax net income of less than $38,461.54. As so altered the normal tax amounted to 24% in the case of corporations having normal-tax net income over $38,461.54, and in the case of corporations having no more than this amount of normal-tax …

Significant Developments In The Law Of Federal Taxation, 1941-1947: I, Paul G. Kauper

Michigan Law Review

A preliminary word on the scope of this review is in order. Since this was originally prepared as one of a series designed to acquaint returning veterans with legal developments during the war period, the year 1941 has been chosen as the starting point, and the review carried forward from that point through to date. The review covering this period is limited to significant developments in the area of federal taxation, with emphasis upon the estate, gift, and income taxes.

Taxation - Income Tax - Deductions - Ordinary And Necessary Business Expenses - Commissions Paid To Senator For Securing Public Contracts, Ralph E. Helper

Michigan Law Review

Taxpayer, a gravel company, employed as salesman a state senator, who obtained several contracts with the State Highway Commission of Louisiana. The Board, of Tax Appeals disallowed deductions for the commissions paid therefor, on the ground that the payments were for using personal influence with a governmental department, pursuant to a contract which is contrary to public policy. Held, in absence of evidence that the state senator agreed to or attempted to use any personal or political influence, the commissions paid to him are deductible business expenses. Alexandria Gravel Go., Inc. v. Commissioner of Internal Revenue, (C. C. …

Depletion Of Oil And Gas Properties For Income Tax Purposes, John W. Beveridge

Michigan Law Review

The Revenue Act of 1936 provides that in computing net income from oil and gas properties there shall be allowed as a deduction from gross income a reasonable allowance for depletion, according to the peculiar conditions in each case. The allowance is made under regulations prescribed by the Commissioner of Internal Revenue.

The first problem is to fix the amount the taxpayer is entitled to recover before he is considered as earning income which is not in essence a mere return of his capital investment. The difficulty of clearly defining the difference between a return of capital and of income …

Municipal Corporations - Constitutional Limitation On Indebtedness - Delinquent Taxes As Deductible Asset, Emma Rae Mann

Michigan Law Review

Plaintiff taxpayer sued to enjoin defendant city from borrowing $500,000 for general public improvements, alleging that if, the city so obligated itself it would be indebted beyond the limit fixed by the constitution at two per cent of the assessed valuation of taxable property. Defendant showed that such limit would not be exceeded if two-thirds of the outstanding delinquent taxes were regarded as deductible. The court denied the injunction and held that since collection of at least two-thirds of such outstanding delinquent taxes was certain this item was properly deductible. Ward v. Pittsburgh, 321 Pa. 414, 184 A. 240 …