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  • S. Blechman & Sons, Inc. v. Commissioner of Internal Revenue, 229 F.2d 925, 2d Cir. (1956)

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    The Tax Court found that a $120,000 payment by a corporation to a stockholder and his wife was for the purchase of securities rather than the cancellation of an employment contract. The Court of Appeals summarizes that this is a question of fact, and the Tax Court's decision must be affirmed unless clearly erroneous. The court notes conflicting evidence was presented, with the stockholder testifying the business was worth $150,000 and a corporate affidavit stating the payment was for stock and debenture holdings. Given this record, the Court of Appeals could not say the Tax Court was clearly wrong in its factual finding. The decision of the Tax Court is therefore affirmed.

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    Filed: 1956-02-06 Precedential Status: Precedential Citations: 229 F.2d 925 Docket: 23471_1

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    The Tax Court found that a $120,000 payment by a corporation to a stockholder and his wife was for the purchase of securities rather than the cancellation of an employment contract. The Court of Appeals summarizes that this is a question of fact, and the Tax Court's decision must be affirmed unless clearly erroneous. The court notes conflicting evidence was presented, with the stockholder testifying the business was worth $150,000 and a corporate affidavit stating the payment was for stock and debenture holdings. Given this record, the Court of Appeals could not say the Tax Court was clearly wrong in its factual finding. The decision of the Tax Court is therefore affirmed.

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    S. Blechman & Sons, Inc. v. Commissioner of Internal Revenue, 229 F.2d 925, 2d Cir. (1956)

    Uploaded by

    Scribd Government Docs
    The Tax Court found that a $120,000 payment by a corporation to a stockholder and his wife was for the purchase of securities rather than the cancellation of an employment contract. The Court of Appeals summarizes that this is a question of fact, and the Tax Court's decision must be affirmed unless clearly erroneous. The court notes conflicting evidence was presented, with the stockholder testifying the business was worth $150,000 and a corporate affidavit stating the payment was for stock and debenture holdings. Given this record, the Court of Appeals could not say the Tax Court was clearly wrong in its factual finding. The decision of the Tax Court is therefore affirmed.

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    of 2

    229 F.

    2d 925

    S. BLECHMAN & SONS, Inc., Petitioner-Appellant,


    v.
    COMMISSIONER OF INTERNAL REVENUE, RespondentAppellee.
    No. 37.
    Docket 23471.

    United States Court of Appeals Second Circuit.


    Argued January 20, 1956.
    Decided February 6, 1956.

    Robert M. Lipton, New York City, for petitioner-appellant.


    H. Brian Holland, Asst. Atty. Gen. (Ellis N. Slack, A. F. Prescott, John J.
    Kelley, Jr., Sp. Assts. to Atty. Gen), for respondent-appellee.
    Before MEDINA, HINCKS and WATERMAN, Circuit Judges.
    PER CURIAM.

    The sole issue on appeal is whether the Tax Court erred in finding that the
    disputed expenditure was for the purchase of securities, rather than the
    cancellation of an employment contract. The question is one of fact.
    Commissioner of Internal Revenue v. Heininger, 320 U.S. 467, 64 S.Ct. 249, 88
    L.Ed. 171. Hence the decision of the Tax Court must be affirmed, unless clearly
    erroneous. Fed.Rules Civ.Proc. rule 52, 28 U.S.C.A., United States v. United
    States Gypsum Co., 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746, rehearing denied
    333 U.S. 869, 68 S.Ct. 788, 92 L.Ed. 1147.

    The payment in question was made pursuant to an agreement between the


    taxpayer and Marx Slonim, a stockholder in the taxpayer, and Slonim's wife,
    owner of debentures issued by the taxpayer. The agreement provided that
    Slonim and his wife were to sell their securities to the taxpayer, that Slonim was
    to resign as director, officer and employee of the taxpayer, and that he and his
    wife were to release any claims against the taxpayer and its other directors and

    stockholders. The contract specified a consideration of $120,000.


    3

    Two officers of the taxpayer testified that $24,000 of the total consideration
    represented payment to Slonim for the termination of his employment contract.
    It appeared, however, that Slonim was employed on a year-to-year arrangement
    and Slonim testified that he had asked for $150,000 as he figured "the business
    is worth that much," which was some indication that the entire payment was for
    the debentures and the stock. Moreover, one of the exhibits was an affidavit of
    petitioner's president, stating that Slonim had resigned and "sold his holdings *
    * * consisting of 440 shares of common stock and $24,200 debenture bonds
    held by his wife * * * to the corporation for the sum of $120,000." We cannot
    say, on this record, that the Tax Court was clearly wrong in resolving this issue
    of fact against the taxpayer.

    Affirmed.

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