Dr. Pepper Bottling Co. v. Commissioner
United States Board of Tax Appeals
Taxpayer was required to set aside and apply two-thirds of its cash on hand over and above $7,500 on its indebtedness under the terms of a written contract executed by it prior to May 1, 1936, which prohibited the payment of any dividends until the indebtedness was paid in full. On July 31, 1937, during the taxable year, the indebtedness was paid in full out of 1937 earnings and profits.
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Taxpayer was required to set aside and apply two-thirds of its cash on hand over and above $7,500 on its indebtedness under the terms of a written contract executed by it prior to May 1, 1936, which prohibited the payment of any dividends until the indebtedness was paid in full. On July 31, 1937, during the taxable year, the indebtedness was paid in full out of 1937 earnings and profits. Held, taxpayer is not entitled to a credit under either section 26(c)(1) or section 26(c)(2) of the Revenue Act of 1936 in the amount of $29,924.38 paid on the indebtedness.
1Opinion of the Court
OPINION.
Disney :
The Commissioner determined a deficiency in petitioner’s income tax liability for 1937 in the amount of $6,428.62. The only question involved is whether the petitioner is entitled to a credit of $29,924.38 under section 26 (c) (1) and (2) of the Revenue Act of 1936, relating to contracts restricting dividends.
The facts were stipulated and are found as stipulated. We set forth herein only such facts as are pertinent.
The petitioner is a Tennessee corporation, with its principal office and place of business at Memphis, Tennessee, and the return was filed with the collector for…
2Cited by3 opinions
- Dr. Pepper Bottling Co. v. CommissionerUnited States Board of Tax Appeals · 1941
- Hercules Gasoline Co. v. CommissionerSupreme Court of the United States · 1946
- Pittsburgh Forgings Co. v. CommissionerUnited States Tax Court · 1943