Carl E. Mathena and Helen B. Mathena, and v. United States

The decision of the district court allowing a refund is affirmed.

Mathena, prior to July 1, 1963, was employed by Akron Savings & Loan Association (Akron), doing business in Akron, Ohio. Closely allied with Akron was Bankers Guaranty Title & Trust Company (Bankers).

An arrangement was made under which Mathena could “eat his cake and keep it, too.” He drew his retirement benefits out of the retirement fund of Akron. He had been drawing a salary of $19,000 a year.

On July 1, 1963, he turned up with a new arrangement. He went on the payroll of Akron at a salary of $10,000 a year as a consultant — obviously an attempt at a “fee" setup. Also, simultaneously, he was newly hired at a price of $10,000 a year to work for Automated Business Services and Systems, Inc. (Automated), a “services” company of which he was the controlling stockholder. Automated had two customers: Akron and Bankers. A contract was signed between Akron and Automated, terminable on one year’s notice, for “services.” A monthly contract was drawn with Bankers, which was never signed, but the parties seem to have operated under it.

By December, 1963, Akron and Bankers wanted to get rid of Mathena.

No formal…