Farmers & Merchants Bank v. Commissioner of Int. Rev.

JOHNSEN, Circuit Judge.

The Commissioner of Internal Revenue assessed income taxes against Farmers and Merchants Bank, of Ceresco, Nebraska, upon its earnings, which the bank had been paying out to its former depositors, under the terms of a reorganization agreement entered into in 1932, for application upon the claims which the depositors had had against the bank when it closed its doors in 1931. The bank contended that the obligation which the reorganization agreement imposed upon it thus to distribute its available earnings, and the equitable hold which the former depositors had upon such…