TAXATION - FEDERAL INCOME TAX - NON-EXEMPTION OF COMPENSATION OF STATE EMPLOYEES DERIVED FROM FUNDS OF LIQUIDATED CORPORATIONS

The Commissioner of Internal Revenue assessed employees of a state or an instrumentality thereof for federal income tax, their compensation having been paid from funds of banks and insurance companies in the liquidation of which they were engaged. Held, that the tax was properly assessed against the taxpayers so engaged because (1) the compensation was paid out of assets of private corporations and (2) the business in which they were employed for the state was not in the discharge of essential governmental duties. Helvering v. Therrell, (U.S. 1938) 58 S. Ct. 539.