Warner Co. v. Commissioner
United States Tax Court
On the record, held: 1. Where petitioner purchased at less than face value certain of its bonds with accrued interest coupons attached, which bonds had been issued at a discount, the gain realized on the principal of the bonds is to be determined by a proportionate allocation between principal and interest. 2. Where petitioner kept its books on an accrual basis, its liability for interest payments on its bonds became fixed on the dates specified in the original instrument…
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On the record, held: 1. Where petitioner purchased at less than face value certain of its bonds with accrued interest coupons attached, which bonds had been issued at a discount, the gain realized on the principal of the bonds is to be determined by a proportionate allocation between principal and interest. 2. Where petitioner kept its books on an accrual basis, its liability for interest payments on its bonds became fixed on the dates specified in the original instrument and the interest was then properly accrued and deductible. Such interest is not a proper item of deduction in a subsequent…
1Opinion of the Court
OPINION.
Leech, Judge:
The first question presented is whether petitioner realized a taxable gain by the purchase and retirement of certain of its bonds at less than face value in the years 1940, 1941, and Í942. A determination of this issue as to 1940, pertinent in arriving at the net income for 1940, is material only for the purpose of computing the excess profits credit carry-over. Petitioner contends that the situation is controlled by Helvering v. American Dental Co., 318 U. S. 322, and there was a gratuitous forgiveness of indebtedness of both principal and interest. The respondent argues…
2Cases cited7 opinions
- United States v. AndersonSupreme Court of the United States · 1926
- United States v. Kirby Lumber CoSupreme Court of the United States · 1931
- Helvering v. American Dental Co.Supreme Court of the United States · 1943
- American National Co. v. United StatesSupreme Court of the United States · 1927
- Palomar Laundry v. CommissionerUnited States Tax Court · 1946
2 more not listed; retrieve them via the Exa API.
3Cited by10 opinions
- Pierce Estates, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Third Circuit · 1952
- Natco Corporation, Formerly National Fireproofing Corporation v. United StatesCourt of Appeals for the Third Circuit · 1956
- Sharon Herald Co. v. GrangerCourt of Appeals for the Third Circuit · 1952
- Sharon Herald Co. v. GrangerDistrict Court, W.D. Pennsylvania · 1951
- Western Maryland Railway Company v. United States of America, (Three Cases)Court of Appeals for the Fourth Circuit · 1955
5 more not listed; retrieve them via the Exa API.