- 87 -
IL NA Tours operated as retail travel agents, for which services
additional compensation could be earned. Thus, at any time, the
funds commingled in corporate accounts could include IL NA Tours’
profit share from ticket sales and commissions earned, in
addition to any funds petitioner’s corporations owed Northwest
and any other airline companies for which they sold tickets.
The fact that Northwest was not entitled to all the funds at
issue finds further support in the fact that pursuant to the
settlement of the Northwest litigation in 1990, Northwest agreed
that petitioner and his corporations would receive $143,543 of
the corporate funds (plus accrued interest) that Northwest
alleged, and petitioner concedes in the instant case, were taken
by him and placed in personal accounts. The record does not
disclose why Northwest agreed that petitioner and his
corporations would receive some of the disputed funds. What the
record does establish is that petitioner’s corporations, unlike
the corporation in Leaf, were not adjudicated bankrupt; instead,
the creditor in the instant case compromised its claim for
something less than all the debtors’ assets.
We accordingly conclude that respondent has failed to show
that the facts in the instant case bring it under the rule in
Leaf. Our conclusion that the amounts petitioner took from his
corporations should be taxed pursuant to section 301(c) finds
Page: Previous 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 NextLast modified: May 25, 2011