Taxation – Federal Income Tax – Secret Withdrawals of Corporate Receipts by Stockholders as Income in Absence of Surplus

As sole stockholder of the Robbins Tire and Rubber Company, the defendant managed and controlled the affairs of the corporation. Over a period of years he intercepted the company’s receipts from several of its large customers and diverted them to his own use. No entries of such receipts were made on the books of the company, nor was any tax paid on them. Defendant was convicted for attempted evasion of his personal income tax on these funds. On appeal, held, affirmed. Taxation is concerned with actual command over property: If does not matter whether defendant got the funds as a legal distribution of corporate property or took them fraudulently, since he assumed command and dominion over the cash and received economic gain therefrom. Davis v. United States, (6th Cir. 1955) 226 F. (2d) 331, cert. den. 350 U.S. 965 (1956).