McClintock-Trunkey Co. v. Commissioner of Internal Revenue

This is an appeal from a Tax Court decision determining deficiencies in petitioner’s income taxes for the fiscal years ending January 31, 1947 and January 31, 1948. The statute involved is § 23 (p) (1) (C), Title 26 of the Internal Reve nue Code, 26 U.S.C.A. § 28 (p)(l)(C), relating to deductions from gross income of contributions of an employer to an exempt profit-sharing trust.

The facts were in the main stipulated. Petitioner by action of its board of directors instituted an employee profit-sharing and benefit plan, effective January 31, 1944. The plan was submitted to the field office of the Bureau and after the making of certain amendments was approved. Petitioner’s purpose was to give its employees the opportunity of receiving pensions at the time of retirement, thereby keeping them satisfied and decreasing the rate of employee turnover. Section 2.1 of the approved plan in part provided that petitioner might contribute an amount from its net profits of not less than 5% thereof or in any amount in excess of that percentage at the discretion of its board, but not in excess of 15% of the total compensation of the. participants.

In 1946 amendments to the plan were prepared by…