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Date: November 6, 2019Preparer: Cathy TelliSubject: WELCH v. HELVERING (1933)Argued: October 19, 1933 Decided: November 6, 1933Facts:The secretary of the E. L. Welch Company, a Minnesota corporation, in the grainbusiness. Welch was pronounced involuntary bankrupt and released from its debts. Helvering entered into a contract with the Kellogg Company for a commission to purchase grain in the company’s behalf. In order for Helving to continue his business dealing from prior customers while employed by Welch he made good on the prior discharged debts of Welch to his ability. While paying back the debts of Welch Helveringmade payments of significant amounts for five consecutive years. The following are commissions received and payments made by and to Helvering. In 1924, commissions totaled $18,028.20, payments of $3,975.97; in 1925, commissions totaled $31,377. 07, payments of $11,968.20; in 1926, commissions totaled $20,925.25, payments of $12,815.72; in 1927, totaled commissions $22,119.61, payments of $7, 379.72; and in 1928, totaled commissions $26,177.56, payments of $11,068.25. The Commissioner can to the conclusion these payments were not deductible from income as ordinary and necessary expenses. But he did consider the payments to be the natureof capital expenditures. To maintain the reputation and good will of Helvering outside of the Welch company but for the intentions more for himself. The Board of Tax Appeals
continued the action of the Commissioner (25 B.T.A. 117), and the Court of Appeals for