Court Opinion

ID: 6803295
Source: CourtListenerOpinion
Date Created: 2022-07-23 18:43:48.718581+00
Date Added: 2024-06-11T16:03:19.833850
License: Public Domain

*168OPINION.
Lansdon :
The petitioner contends that it should include in gross income for the taxable year only amounts of the distributive net earnings of the vessels of which it is one of several co-owners that it actually received. The Commissioner has held that the entire annual distributive earnings of such vessels should be included in *169the gross income of the individual co-owners, even though a part of such earnings is retained by the managing owner as a reserve for use in future operations.
We are of the opinion that the managing owner of a vessel jointly owned by several co-owners is the agent of such co-owners and that net earnings received by him must be regarded as received by the several co-owners in the proportion of their interests in such vessel. While the co-ownership of a vessel does not constitute a partnership or a joint stock association, it does result in the creation of an operating entity that earns income by the use of capital. Such income is taxable.
We are of the opinion that the amounts of $165 and $140, respectively, were properly deductible as additional compensation. See Appeal of Edwin G. Brandenburg, 4 B. T. A. 108.
Judgment will be entered on 15 days’ notice, under Bule 50.