Vegetable Farms, Inc. v. Commissioner of Internal Revenue

Tamura and Matsuno bought out the interest of the other partners in a business of growing vegetables, on October -31, 1940, and organized Vegetable Farms, Inc. Tamura managed the operations and devoted full time and Matsuno only part time. Tamura received a salary. After December 7, 1941, these Japanese began to have difficulty because of hostility toward them. Therefore Vegetable Farms bought a marketing plant. In the early part of 1942, these Japanese transferred all of their stock in the company, in trust, to three men of •experience in vegetable growing. On April 28, 1942, both Japanese were placed in concentration camps. They then resigned as •officers and directors, their places being taken by the trustees. Vegetable Farms entered into an agreement with California Lettuce Growers, Inc., which was ■owned and operated by the same individuals who were trustees for the two Japanese, to purchase all the growing crops of Vegetable Farms and certain •of its equipment, with land leases, for the sum of $247,460.17. The agreement also provided for lease of various equipment for a five-year term at an annual rental of $22,500, with the option to purchase for the sum of $35,000 at the…