Wilshire West. Sandwiches v. C.I.R

40 Citing cases

  1. Rowan v. United States

    219 F.2d 51 (5th Cir. 1955)   Cited 84 times
    In Rowan, the case of Wilshire Western Sandwiches, Inc. v. Commissioner, 175 F.2d 718 (9th Cir. 1949) is cited with approval.

    Of course, even the fact that the advance is for acquisition of capital assets is not conclusive on the point. Wilshire Western Sandwiches, Inc. v. Commissioner, 9 Cir., 175 F.2d 718. We consider from a reading of the Government's brief that it is conceded that if the advances during the years 1941-1947 were loans and they retained that status as debts owed to the partnership, then if all or a part of these debts became worthless in December, 1947, they were non-business debts which became worthless within the taxable year within the meaning of Section 23(k)(4).

  2. Earle v. W.J. Jones Son

    200 F.2d 846 (9th Cir. 1952)   Cited 28 times
    In Earle v. W. J. Jones Son, 200 F.2d 846 (C.A. 9, 1952), a Mexican mining company was capitalized with only $1,000 in cash and an option covering the mining rights to certain property.

    Fed.Rules of Civ.Proc.Rule 52(a), 28 U.S.C.A.; Smyth v. Barneson, 9 Cir., 181 F.2d 143. Wilshire Western Sandwiches v. Commissioner, 9 Cir., 175 F.2d 718, 720; Mattiessen v. Commissioner, 2 Cir., 194 F.2d 659, 661. United States v. Yellow Cab Co., 338 U.S. 338, 341, 70 S.Ct. 177, 179, 94 L.Ed. 150.

  3. Royalty Service Corporation v. United States

    178 F. Supp. 216 (D. Mont. 1959)   Cited 6 times

    " Commissioner of Internal Revenue v. Proctor Shop, 9 Cir., 1936, 82 F.2d 792, 794. The intent of the parties is very important, if not controlling. Wilshire Western Sandwiches v. Commissioner, 9 Cir., 1949, 175 F.2d 718, 720-721. Commissioner of Internal Revenue v. Court Holding Co., 1945, 324 U.S. 331, 65 S.Ct. 707, 89 L.Ed. 981.

  4. A.R. Lantz Co. v. United States

    424 F.2d 1330 (9th Cir. 1970)   Cited 46 times
    In A. R. Lantz Co. v. United States, 424 F.2d 1330 (C.A. 9, 1970), the Court of Appeals responded to the taxpayer's argument that formal documentation of a debt should control for tax purposes unless a sham, a tax subterfuge, or a transaction wholly without substance is shown.

    (Lundgren v. Commissioner, supra, 376 F.2d at p. 626.) Certain of the Ninth Circuit cases, e.g., Taft v. Commissioner of Internal Revenue, 314 F.2d 620 (9th Cir. 1963); Los Angeles Shipbuilding Drydock Corp. v. United States, 289 F.2d 222 (9th Cir. 1961); Wilshire Western Sandwiches v. Commissioner of Internal Revenue, 175 F.2d 718 (9th Cir. 1949); Maloney v. Spencer, 172 F.2d 638 (9th Cir. 1949), when read alone, might suggest that the most important of the eleven factors is the objective intent of the parties. That is what taxpayer would have us believe. (Brief for Appellant at p. 18.)

  5. Sayles Finishing Plants v. United States

    399 F.2d 214 (Fed. Cir. 1968)   Cited 7 times
    Allowing a deduction for interest on "indebtedness"

    In Rowan v. United States, 219 F.2d 51 (5th Cir. 1955), the taxpayers had over a period of years made advances in the form of loans to their wholly owned corporation, and the court held that the unpaid portion of such advances was deductible as a worthless debt in the taxable year involved, after a careful review of the evidence on the premise that whether such advances were loans or capital contributions depended on the intent of the parties, to be ascertained from all relevant facts and circumstances. In Wilshire Western Sandwiches, Inc. v. Commissioner of Internal Revenue, 175 F.2d 718 (9th Cir. 1949), taxpayer corporation was incorporated to engage in the restaurant business, and its four incorporators (who became its sole stockholders) advanced $30,000, half of which was to be capital stock contribution and half a loan, and taxpayer's promissory notes were issued for the purported loan to each stockholder accordingly. The court held that the transaction involving the promissory notes was a loan, interest on which was deductible, recognizing, however, that a lending transaction between stockholders and their corporation subjects such transaction to close scrutiny as to the tax effect, but concluding that while there were features both ways as to whether the pertinent advances were loans or stock purchases, those sustaining the loan conclusion greatly preponderated, chief of which was the intent of the parties at the time of entering into the transaction.

  6. J.S. Biritz Construction Co. v. C.I.R

    387 F.2d 451 (8th Cir. 1967)   Cited 24 times
    In J. S. Biritz Construction Co. v. Commissioner of Internal Revenue, supra, 387 F.2d at 456-57, we recognized that each case turns upon its particular facts and that the varying indicia applied in determining the issue may or may not have relevancy to a particular case.

    On the other hand there are a number of cases supporting petitioner's contention that the transaction was in form and substance a loan, creating a true debtor-creditor relationship rather than an equity investment. These cases are: Rowan v. United States, 219 F.2d 51 (5 Cir. 1955); Gloucester Ice Cold Storage Co. v. Commissioner of Internal Revenue, 298 F.2d 183 (1 Cir. 1962); Nassau Lens Co. v. Commissioner of Internal Revenue, 308 F.2d 39 (2 Cir. 1962); Byerlite Corp. v. Williams, 286 F.2d 285 (6 Cir. 1960); Kraft Foods Co. v. Commissioner of Internal Revenue, 232 F.2d 118 (2 Cir. 1956); Miller's Estate v. Commissioner of Internal Revenue, 239 F.2d 729 (9 Cir. 1956); Wilshire Western Sandwiches v. Commissioner of Internal Revenue, 175 F.2d 718 (9 Cir. 1949); Ruspyn Corporation v. Commissioner of Internal Revenue, 18 T.C. 769 (1952). Most of the cases in attempting to assess the true nature of a claimed loan transaction use varying indicia in an attempt to determine the true and actual nature of a transaction.

  7. Utility Trailer Manufacturing Company v. U.S.

    212 F. Supp. 773 (S.D. Cal. 1962)   Cited 4 times

    Wilshire West. Sandwiches v. C.I.R., 9 Cir. 1949, 175 F.2d 718, 721, quoting from C.I.R. v. Meridian Thirteenth Realty Co., 7 Cir. 1942, 132 F.2d 182, 186. The issue presented is a "mixed question of law and fact" in the application of the statutes to the particular set of facts.

  8. Georgia-Pacific Corp. v. Comm'r of Internal Revenue

    63 T.C. 790 (U.S.T.C. 1975)   Cited 22 times
    In Georgia-Pacific Corp. v. Commissioner, 63 T.C. 790, 796 (1975), this Court indicated that each debt-equity case must be decided on its own facts and that there are so many combinations of factual circumstances that precedents in these factual cases are generally of little value.

    While a taxpayer must in other contexts normally accept the tax consequences of the way in which he deliberately chose to cast his transaction, advances of the type here involved must be characterized in terms of economic reality for the year at issue. Wilshire & Western Sandwiches, Inc. v. Commissioner, 175 F.2d 718, 721 (C.A. 9, 1949), reversing a Memorandum Opinion of this Court; J. A. Maurer, Inc., 30 T.C. 1273, 1289 (1958). Changing circumstances as time passes may alter the original character of an advance and transform it into equity.

  9. Bordo Products Company v. United States

    476 F.2d 1312 (Fed. Cir. 1973)   Cited 9 times

    The validity of loans even to a controlled corporation is well established. George E. Warren Corp., supra, 141 F. Supp. 935, 135 Ct.Cl. at 312; Wilshire Western Sandwiches, Inc. v. Commissioner, 175 F.2d 718, 721 (9th Cir. 1949); Byerlite Corp. v. Williams, supra. Indeed, as noted in Plumb, supra, at 447:

  10. Fin Hay Realty Co. v. United States

    398 F.2d 694 (3d Cir. 1968)   Cited 102 times
    Distinguishing between shareholders' contributions of capital to a close corporation and loans on which interest payments were deductible for tax purposes

    Cases denying the validity of debt because it is contemporaneously advanced with the start of corporate life generally involve other industries or a partnership becoming a corporation. See, e.g., Farley Realty Corporation v. C.I.R., 279 F.2d 701, 704 (2nd Cir. 1960); Wilshire West Sandwiches v. Commissioner of Int. R., 175 F.2d 718, 720 (9th Cir. 1949). As noted in P.M. Finance Corporation v. C.I.R., supra, at 789, control of the corporation requires the courts to examine the shareholder-creditor relationship with great care but "the decisions [footnote omitted] in most instances have required some further indication that sole or pro-rata shareholder `debt' is in reality equity rather than indebtedness."