OLD COLONY TRUST CO. V. COMMISSIONER
279 U.S. 716 (1929)
NATURE OF THE CASE: This was a dispute over the status of company tax payments on
individual employee income. Old Colony (D), corporation, challenged a decision, which held
that payment by the employer of the income taxes assessable against the employee constituted
additional taxable income to such employee.
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.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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