George Washington Law Review
salary indebtedness, tax liability, tax law
This article discusses C.I.R. v. Fender Sales, Inc., 338 F. 2d 924 (9th Cir. 1964). The author concludes that by taxing at ordinary rates the benefit realized by respondents when they invested the income in the corporation which they owned in exchange for its stock, the court eliminated the possibility--suggested by the dissent--of any undeserved capital gains treatment. The case serves to reinforce the fait accompli in the tax law between the treatment of ordinary income and capital transactions.
William Tabac, Cancellation of Salary Indebtedness: Stock Distribution as Realization of Income to Shareholder-Employee, 33 George Washington Law Review 1142 (1965)