Terminal Inv. Co. v. Commissioner
United States Tax Court
Pursuant to a 1935 reorganization under section 77B, Bankruptcy Act, noncumulative, nondetachable scrip certificates were attached to petitioner's outstanding bonds. They represented a portion of the past due interest on the bonds and were payable during the extended life of the bonds in installments, only out of net earnings if any remained after payment of stated prior obligations. Because of the contingencies, nothing ever became payable on the certificates.
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Pursuant to a 1935 reorganization under section 77B, Bankruptcy Act, noncumulative, nondetachable scrip certificates were attached to petitioner's outstanding bonds. They represented a portion of the past due interest on the bonds and were payable during the extended life of the bonds in installments, only out of net earnings if any remained after payment of stated prior obligations. Because of the contingencies, nothing ever became payable on the certificates. In the taxable year the petitioner, with borrowed funds, purchased its outstanding bonds at less than par and the unmatured…
1Opinion of the Court
OPINI.'N.
Arnold, Judge-.
On August 1,1933, the petitioner had outstanding $495,000 par value of its bonds and on that date semiannual interest coupons at the rate of 6 percent, totaling $14,850, were payable but were not paid. Petitioner accrued this interest on its books and took a deduction in that amount on' its income tax return for 1933. On February 1 and August 1, 1934, additional interest coupons, totaling $29,700, became payable but. were unpaid. This interest obligation was also accrued and deducted on petitioner’s Í934 return. In 1935 petitioner underwent a reorganization under…
2Cases cited7 opinions
- United States v. AndersonSupreme Court of the United States · 1926
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- Burnet v. LoganSupreme Court of the United States · 1931
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