2010-12-27
Continuing our series on Famous Tax Quotes (quotes from court opinions with language that is colorful or that concisely states an important tax principle) today's tax quote is:
We agree with respondent that petitioners have a “hat problem”. Between 1982 and 1991, [various individuals] held positions as officers, directors, attorneys in fact, powers of attorney, or trustees in the listed companies . . . The individuals were working in several different capacities concurrently, and it is unclear in which capacity they were working at any particular time. Additionally, the individuals were also shareholders in many entities. . . . If they were acting in their capacity as shareholders, the services they provided to protect their interests as shareholders are not deductible under section 162. . . . We conclude that the amounts paid to [one individual] were wages, and the amounts paid to [other individuals] were dividends . . . .
Medieval Attractions N.V. v. Commissioner, 72 TCM 924 (1996)