Nat Holt and Blanche Holt, Husband and Wife v. Commissioner of Internal Revenue

Petitioners, Nat Holt and Blanche Holt, husband and wife, reported certain income for the years 1953, 1954 and 1955 which they treated as capital gain. The Commissioner of Internal Revenue treating the income as ordinary income assessed deficiencies for taxes due in those years. A petition for redetermination of deficiencies was filed with the Tax Court and the Tax Court upheld the contentions of the Commissioner that the income was to be taxed as ordinary income rather than as capital gain. We have jurisdiction of the petition to review the decision of the Tax Court under the provisions of Section 7482 of the Internal Revenue Code of 1954, 26 U.S.C.A. § 7482 .

The petitioner, Nat Holt, is a producer of motion pictures. On February 6, 1950, petitioner executed an agreement with Paramount Picture Corporation, hereinafter referred to as Paramount, whereby petitioner was to produce two motion pictures for Paramount in return for a production fee of $15,000 per picture plus a sum equal to 25% of the excess gross receipts from the pictures. “Excess gross receipts” were defined in the contract. Paramount was to provide the funds necessary for production and it was to approve certain…