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5/5/2018Checkpoint | DocumentCheckpoint Contents Federal Library Federal Source Materials Federal Tax Decisions American Federal Tax Reports American Federal Tax Reports (Prior Years) 1933 AFTR Vol. 12 12 AFTR 1460 (54 S. Ct. 95) - 12 AFTR 1340 (67 F.(2d) 3) WELCH v. HELVERING, 12 AFTR 1456 (54 S. Ct. 8), (S Ct)., 11/06/1933 American Federal Tax ReportsWELCH v. HELVERING, Cite as 12 AFTR 1456 (54 S. Ct. 8),(S Ct). , 11/06/1933WELCH v. HELVERING, Commissioner of Internal Revenue.Case Information:[pg. 1456]Code Sec(s):Court Name:U.S. Supreme CourtDocket No.:No. 33.Date Argued:10/19/1933Date Decided:11/06/1933Disposition:Cites:12 AFTR 1456, 290 US 111, 54 S Ct 8, 78 L Ed 212,3 USTC P 1164.HEADNOTE1. "Ordinary expenses," within provision for deductions in computing net income, are notnecessarily habitual or normal expenses in sense that same taxpayer will have to make them oftenReference(s): (Revenue Acts 1924 and 1926, Sec. 214 (a) (1); Revenue Act 1928, Sec. 23 (a)).OPINION
5/5/2018Checkpoint | DocumentMessrs. Edward S. Stringer, Thomas D. O'Brien, and Alexander E. Horn, all of St. Paul, Minn., forpetitioner.The Attorney General and Mr. H. Brian Holland, of Philadelphia, Pa., for respondent.Proceeding on the petition of Thomas H. Welch, opposed by Guy T. Helvering,Commissioner of Internal Revenue, to review a decision of the Board of Tax Appeals. Thedecision was affirmed by the Circuit Court of Appeals [63 F.(2d) 976] and the petitiondismissed, and petitioner brings certiorari (289 U. S. 720, 53 S. Ct. 787, 77 L.Ed. __).Affirmed.On Writ of Certiorari to the Circuit Court of Appeals for the Eighth Circuit.Judge:Mr. Justice CARDOZO delivered the opinion of the Court.The question to be determined is whether payments by a taxpayer, who is in business as acommission agent, are allowable deductions in the computation of his income if made to thecreditors of a bankrupt corporation in an endeavor to strengthen his own standing and credit.In 1922 petitioner was the secretary of the E. L. Welch Company, a Minnesota corporation,engaged in the grain business. The company was adjudged an involuntary bankrupt, and had adischarge from its debts. Thereafter the petitioner made a contract with the Kellogg Company topurchase grain for it on a commission. In order to re-establish his relations with customers whomhe had known when acting for the Welch Company and to solidify his credit and standing, hedecided to pay the debts of the Welch business so far as he was able. In fulfillment of that resolve,he made payments of substantial amounts during five successive years. In 1924, the commissionswere $18,028.20, the payments $3,975.97; in 1925, the commissions $31,377.07, the payments$11,968.20; in 1926, the commissions $20,925.25, the payments $12,815.72; in 1927, the