Case Name: Appeal of FORTY-FOUR CIGAR CO
Court: United States Board of Tax Appeals
Jurisdiction: United States
Decision Date: 1925-11-04
Citations: 2 B.T.A. 1156
Docket Number: Docket No. 1405
Parties: Appeal of FORTY-FOUR CIGAR CO.
Judges: Before Ivins, KoeneR, and Moeeis.
Reporter: Reports of the United States Board of Tax Appeals
Volume: 2
Pages: 1156–1158

Head Matter:
Appeal of FORTY-FOUR CIGAR CO.
Docket No. 1405.
Submitted May 14, 1925.
Decided November 4, 1925.
M. L. SeJidllek, Esq., for the taxpayer.
E. O. Lake, Esq., for the Commissioner.
Before Ivins, KoeneR, and Moeeis.
This decision was prepared by Mr. Ivins during his term of office.

Opinion:
ORINION.
Ivins:
In final analysis, the money and credit of the corporation were paid out for the purpose of settling disagreement in the family of the president of the company, who owned practically all of the stock. To be sure, it was done with the consent and upon the recommendation of the minority stockholders and officers, who feared that if it were not done the company would be ruined. The transaction amounted to a withdrawal of corporate assets and their use for the personal benefit of the president and principal stockholder. The facts are that the president had insufficient means, except by using the assets of the corporation, to enable him to induce his relative to cease his pernicious activities. That those activities, if continued, would probably have resulted in the ruin of the corporation's business does not, in our opinion, render the payments a loss to or an ordinary and necessary business expense of the corporation, or deprive them of their essential character as personal expenditures of its president.