First National Bank of Sleepy Eye v. Commissioner

[86] OPINION. Trussell: The record of this case is convincing that the First National Bank of Sleepy Eye, Minn., never carried on any insurance agency business, and that it never represented any insurance companies. Prior to the organization of the bank Griffith and Smith had been engaged in the insurance agency business and continued in that business. Individually and personally they were the representatives of insurance companies and the fees and commissions on insurance policies and contracts written were the individual earnings of Griffith and Smith. That they, in 1920, donated a portion of the moneys so earned by them individually to the surplus account of the bank and allowed the three minority stockholders to share in a stock dividend, distributing such reserve, shows only that Griffith and Smith, owning twenty-three twenty-fifths of the stock of the bank were willing and did share with the three minority stockholders two twenty-fifths of a portion of the earnings of their insurance business. We are of the opinion that the moneys earned by Griffith and Smith as insurance agents were erroneously added to the gross income of the bank. The deficiencies may he redetermined in accordance with the foregoing findings of fact and opinion upon 15 days’ notice,, pwrsuanb to Rule 50, and judgment will he entered accordingly.