Sam Snyder v. Harry C. Westover, Former Collector of Internal Revenue

In 1928 plaintiff-appellant became permanently separated but not divorced from his wife whom he had married in 1917. There were two children of the marriage, Bernard aged 19 and Geraldine aged 22. In 1940 plaintiff-appellant, who had been in the used car business in Denver, moved to Los Angeles where, together with one Wallace, he purchased the California Car Company, a corporation, and carried on a used car business. Sixty per cent of the stock in said corporation was issued to plaintiff, twenty per cent to Wallace, and twenty per cent to one Mosko for qualification purposes. Plaintiff made his investment in the corporation with funds brought by him from Denver plus $1500.00 loaned to him by Wallace.

In 1942 appellant-taxpayer saw his wife in Denver, and she told him she could take his entire interest in the business from him and would do so unless he would take the children into the business with one-fourth interest for each. Taxpayer claims that because of his wife’s demands, in July of 1942 he acquired Wallace’s interest in the corporation and had it dissolved. And on August 1, 1942, he entered into a written partnership agreement with his chil dren to carry on the business…