Twin Oaks Co. v. Commissioner of Internal Revenue

This is a petition to review a decision of the United States Tax Court sustaining the assessment of income taxes against the corporate petitioner for the years 1941-44 inclusive.

Prior to January, 1941, the Petitioner had, for many years, been engaged in the purchase and sale of builders’ materials. During all this period the business had been managed by Rogers, who," with - 473 shares of the corporate stock, was the corporation’s principal stockholder, and Scharpf, who held 35.3 shares and whose wife owned the remaining 437.7 shares. In January, 1941, after the corporation had for some time realized unsatisfactory profits, pursuant to a plan suggested by Scharpf and, after some opposition, agreed to by Rogers, the latter and his wife and Scharpf and his wife executed a partnership agreement whereby the four, as equal partners, were to take over the business of the corporation, purchasing its operating assets and leasing from it the real estate on which the business had been and was then being conducted. The two men were to continue to manage the business; each was to receive an annual salary of $6,600 in addition to one-fourth of the partnership profits; their wives were to…