Commissioner of Internal Revenue v. Bear Film Co., a Corporation

The complicated state of facts from which the single question for decision here arises may be reviewed for background in our opinion in Vincent v. Commissioner of Internal Revenue, 9 Cir., 219 F.2d 228 . However, the decision there has no relation to or effect upon the determination here.

The question is:

This is the $61,000.00 which the state courts required Bear to pay to Virginia Hansen Vincent discharging the obligation of Albert Hansen to pay to her this sum in return for a release of Bear’s liability to pay the same amount to the estate of Albert Hansen as additional compensation for the services of the latter previously rendered as president and manager of Bear.

The deduction was contested until the judgment of the state court became final in 1946. Payment was made in that year and represented a deductible amount as a business expense under § 23 (a) (1) (A) of the Internal Revenue Code, 26 U.S.C.A. § 23 (a) (1) (A).

The Tax Court correctly allowed Bear to deduct the sum of $61,000.00 in 1946.

The Commissioner believes this decision was correct and should be affirmed. Appeal was taken “for protective purposes only in the event that upon review of the decision of the Tax…