DEAN V. COMMISSIONER
197 F.2d 1019 (3rd Cir, 1951)
NATURE OF THE CASE: This was a dispute over the rental value of property held in the name
of a corporation. Dean (D) challenged the judgment of the Tax Court, which held that D was
required to pay income taxes for the rental value of property held in the name of a
corporation of which D and his wife were the sole shareholders.
FACTS: D (H and W) were sole shareholders in a personal holding company. W owned 80% of
the stock. The real estate was owned by W prior to marriage. W and H continued to occupy it
after their marriage and W spent and continued to spend large sums of money in keeping and
beautifying the property. In 1931, the corporation was indebted to the bank for a large sum
and the bank insisted the residence be transferred to the corporation. This was done. H and
W continued to occupy the residence as a home after the transfer. H was in the military
during WWII but received from the corporation, the difference between his military pay and
the salary he got from the corporation. The IRS took the position that the fair market
rental value of the residence was to be included in H's gross income under Section 22. The
tax court agreed.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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