Cornelius G. Noble and Pansy H. Noble v. Commissioner of Internal Revenue

This cause is before the Court on petition for review of a decision of the Tax Court Which sustained the determi nation of income tax deficiencies against the petitioners for the taxable years 1958, 1959 and 1960 in the respective amounts of $2,394.59, $3,716.74 and $4,-395.27. Jurisdiction of this Court is invoked under Sections 7482 and 7483 of the Internal Revenue Codes.

Cornelius Noble and his wife Pansy Noble, petitioners herein, are the sole shareholders of a California corporation, known as Noble’s Independent Meat Company (hereinafter referred to as the corporation). The corporation upon its organization in 1946 took over the meat packing business which the petitioners had theretofore operated as a sole proprietorship. The business of the corporation is conducted in the State of California where the petitioners reside.

In 1955 the petitioners, individually, loaned to the corporation the sum of $300,000 for the purpose of acquiring additional equipment and to meet operating expenses. The note evidencing the loan was secured by a Deed of Trust on corporate property. Under the terms of the loan agreement, the corporation would make 120 monthly payments of $1761.99 and would…