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Commissioner of Internal Revenue v. Brooklyn Radio Service Corp.

December 2, 1935

COMMISSIONER OF INTERNAL REVENUE
v.
BROOKLYN RADIO SERVICE CORPORATION



Appeal from the Board of Tax Appeals.

Author: Hand

Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

On December 28, 1928, the board of directors of the Brooklyn Radio Corporation adopted the following resolution:

"Resolved: That Mr. Benjamin Ginsberg, the President of this corporation receive a salary for the year 1929 the sum of Twelve Thousand ($12,000.00), payable $1,000.00 per month, plus 2% of the net sales for the year 1929, with the understanding however, that such 2% of the net sales be not paid to him as long as the corporation is indebted to Finance Companies on account of its own insufficiency of working capital or to any banks, and in no event until after January 1, 1930, and with the further understanding that said 2% of the net sales to be due to Benjamin Ginsberg be subordinated by him to the indebtedness to all other creditors of this corporation."

The salary of the president of the corporation for the year 1929 as per the above resolution would be computed as follows:

A. Fixed salary $12,000.00

B. Salary computed at the rate

of 2% of the net sales in

1929 amounting to $1,687,-

880.73 33,757.61

$45,757.61

The balance sheet of the taxpayer for the close of the ...


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