TAXATION - SOCIAL SECURITY - DISSOLUTION OF CORPORATION AND FORMATION OF PARTNERSHIP AS MEANS OF AVOIDING TAX

Authors

Arthur P. Boynton, University of Michigan Law SchoolFollow

Abstract

The O Company surrendered its corporate charter and began operating under an agreement purporting to establish a partnership relation between the former officers and employees whereby complete management including the power to employ, discharge and control the duties of its members was vested in a "board of control" elected by and subject to changes made by the majority in interest. Net profits and losses were shared in proportion to the respective interests. The firm could be dissolved only by a vote of the majority in interest and not by transfer of interest, death or resignation of a member. Advice was requested of the Internal Revenue Bureau whether this organization was a partnership for purposes of the social security taxes. Held, that the organization as such was not a partnership but an "association" taxable as a "corporation" for purposes of Titles VIII and IX of the Social Security Act, and individuals performing services for the organization were "employees" thereof for purposes of those titles. S. S. T. 337, INT. REV, BULL., No. 43, p. 6 (Oct. 24, 1938), 1 C. C. H. UNEMPLOYMENT INSURANCE SERVICE, U 8722 (1938).

Recommended Citation

Arthur P. Boynton, TAXATION - SOCIAL SECURITY - DISSOLUTION OF CORPORATION AND FORMATION OF PARTNERSHIP AS MEANS OF AVOIDING TAX, 37 Mich. L. Rev. 986 (1939).
Available at: https://repository.law.umich.edu/mlr/vol37/iss6/28