Franken v. Commissioner

W. A. FRANKEN, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. SCOTT R. TIMMONS, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. Franken v. Commissioner Docket Nos. 32042, 32044. United States Board of Tax Appeals 24 B.T.A. 39; 1931 BTA LEXIS 1702; September 17, 1931, Promulgated *1702 Compensation for professional services rendered as attorney for certain municipal corporations held not exempt from taxation under section 1211 of the Revenue Act of 1926. Burnet v. Jones, 50 Fed.(2d) 14. S. J. Jones, Esq., W. A. Franken, Esq., and Scott R. Timmons, Esq., for the petitioners. L. A. Luce, Esq., for the respondent. LANSDON *39 The respondent has asserted deficiencies in income taxes for 1922, against W. A. Franken and Scott R. Timmons, in the respective amounts of $156.53 and $119.70. The deficiencies arise from the respondent's determination that the amount of $4,925.83 received by each of the petitioners as compensation for legal services rendered to certain political subdivisions of Missouri is not exempt from income tax under the provisions of section 1211 of the Revenue Act of 1926. FINDINGS OF FACT. The petitioners are individuals residing at Carrollton, Mo., where they have been engaged in the practice of law, as partners, since January 1, 1915. By contract dated March 19, 1917, and supplemental agreements entered into thereafter, all of which are quoted in *1703 , the petitioners, together with other attorneys, were engaged to perform certain legal services for the Norborne Land Drainage District Company. In 1922 each of the petitioners received $3,625.83 as compensation for services rendered under the contract. On April 21, 1921, the petitioners entered into a contract with the Egypt-Prairie Drainage District, agreeing to do all of the legal work for such district in consideration of the payment to them of 4 per cent of the total bond issue, plus the cash paid in by land owners. In 1922 each of the petitioners received $1,200 under the contract. The petitioners were engaged to perform all necessary legal work during 1921 for the city of Norborne, Mo., which is a regularly organized city of the fourth class. As compensation for such services each received $100 in 1922. *40 Throughout the years from 1917 to 1922, inclusive, the petitioners continued their general law practice at Carrollton, Mo. OPINION. LANSDON: The identical question raised in these proceedings as to the compensation received by each of the petitioners for legal services rendered to the Norborne Land Drainage*1704 District Company has been decided by the Circuit Court of Appeals for the Eighth Circuit in , where the compensation received by S. J. Jones, who was also one of the attorneys for such company, was held to be taxable. A similar question is presented as to the compensation received by each of the petitioners for legal services rendered to the Egypt-Prairie Drainage District, under a contract of employment almost identical in its terms with the Norborne contract. Upon authority of the Jones case, supra, which we think is controlling as to both items of income, the respondent's determination is approved. As to the compensation of $100 received by each of the petitioners for legal services rendered to the city of Norborne, Mo., the record is insufficient for us to determine whether the petitioners were employees of the city, in accordance with our holding in , or independent contractors. We must, therefore, approve the determination of the respondent. Decision will be entered for the respondent.