Respondents' Exhibit C Minutes of Informal Hearing Held on MEMORANDUM RE: Charles F. Nield 14 Overhill Road Scarsdale, N. Y. Informal hearing had at the New York office before DEPUTY COMMISSIONER WILBER and MR. BERINSTEIN on June 22, 1938 Taxpayer appeared in person Assessment #751698-1934 Mr. Berinstein: #751699-1935 The question involved is the taxability of certain amounts received by you during 1934 and 1935 from the Green Fuel Economizer Company. Were you employed by the Green Fuel Economizer Company any time in the past? Mr. Nield: Certainly. Mr. Berinstein: What was the inclusive period during which you were employed? Mr. Nield: I was president from 1921 to October 1933 and was a director during that period. My connection goes back further than that. Mr. Berinstein: Subsequent to your resignation did you continue to hold stock ownership? 43 44 45 46 Mr. Nield: Respondents' Exhibit C No. I only had one qualifying share. Mr. Berinstein: Outline the amount received during each of the years 1934 and 1935 from the company and your contention as to the purpose for which the payment was made. Mr. Nield: I can only repeat what I have said in corre47 spondence. I resigned October 31, 1933. In 1934 I was given $10,000 and in 1935 I was given $25,000. Mr. Berinstein: Were those payments made as the result of a resolution passed by the Board of Directors? Mr. Nield: They were in one case and in the other the corporation had dissolved and it was done by resolution of the liquidators. 48 Mr. Berinstein: State the primary purpose or consideration for making these payments. Mr. Nield: It was no consideration. It was a gift. I had resigned and they were a gift and I was so informed when I received the payments. All I can do is offer proof of what I have told the department. Mr. Wilber: Have we a copy of the resolution under which it was paid? Mr. Nield: Respondents' Exhibit C You have. All I can do today is to show proofs that they were gifts. I have brought with me a certified copy of both resolutions. Mr. Berinstein: Subsequent to your withdrawal from the corporation were any of the members of your family still interested in the corporation? Mr. Nield: No. I don't think it is one of those things that you might understand. There was only one stockholder in this corporation and it was an act of kindness on that stockholder's part. It was a gift on his part to me. It had to come through the corporation but it was instigated by the stockholder who owned the company. Mr. Berinstein: Don't you feel that this payment was in consideration of past service rendered either to this individual or the corporation? Mr. Nield: Absolutely not. Mr. Berinstein: Do you feel that if you had never been employed by the corporation you would have received this bonus? Mr. Nield: They would not have known me if I had not been employed. How could they give it to me? Mr. Berinstein: Are you aware as to whether or not when these payments were made to you they were charged 49 50 51 52 53 Respondents' Exhibit C on the books of the corporation as salary payments? Mr. Nield: I will show you the company's information to me. I have not seen the books since I retired. Here is the letter of the president who told me what was done. Mr. Berinstein: This is a communication from the president of the Green Fuel Economizer Co., Inc., dated October 29, 1937 in which it is indicated that these payments represented gifts and were not in payment for services rendered. It is also indicated in the letter that the payments were treated as gifts on the books of the corporation and were not deducted by them for Federal or State income tax purposes. Mr. Nield: This letter is the result of my being taxed. After I was taxed I went to the President and this letter is the result. I had been informed that they 54 were gifts. Mr. Berinstein: Have you rendered any incidental service subsequent to your resignation? Mr. Nield: Not a minute. I was sick. I was sick from 1933 to 1936. Mr. Wilber: We will go over it again. Mr. Nield: These gifts were gifts given by the stockholder. They were not really by the directors but they had Respondents' Exhibit C to approve them when the stockholder wanted to make them. On the books of the corporation these payments have been treated as honorarium. I filed with the Federal government a gift tax information return. Mr. Berinstein: 55 You state that this gift was made at the suggestion of the sole stockholder. Did you at any time prior to your connection with the Green Fuel Economizer Corporation render service to this chief stockholder. You were never in his indi- 56 vidual employ? Mr. Nield: No. The sole stockholder was really another corporation. The Green Fuel Economizer is a subsidiary of a parent corporation and the stock was owned by the parent corporation. I have been in Albany on this and talked with Mr. Pross. I resigned through ill-health. MLL |