Old Colony Trust Co. v. Commissioner

279 U.S. 716 (1929)

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Nature of the Case

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Facts

Wood was president of American Woolen during the years 1918-1920. In 1918, he got salary and commissions from the company amounting to $978,725, and in 1919 he got $548,132,27. In August 1916, Woolen adopted a resolution that was to take effect in 1919 and 1920 in that the company will pay all the income taxes upon the salaries of all of its officers and that all the listed officers were to get their compensation without deduction for any type of taxes. Pursuant to this resolution, Woolen paid Wood's federal income and surtaxes due of $681,169.88 in 1918 and $351,179.27 in 1919. The company paid the taxes in the next year. The IRS determined that this payment amounted to additional income to Wood that was itself taxable. This appeal resulted.