J. A. Maurer, Inc. v. Commissioner
United States Tax Court
At the end of its wartime operations petitioner corporation had working capital of $ 15,000 and faced necessity of developing products for competitive peacetime market, which would require financing in considerable amount on long-term basis. Petitioner's majority stockholder agreed to finance this program and, directly or indirectly, advanced $ 900,000 to petitioner evidenced by its demand notes. Petitioner did not put up any security for these notes.
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At the end of its wartime operations petitioner corporation had working capital of $ 15,000 and faced necessity of developing products for competitive peacetime market, which would require financing in considerable amount on long-term basis. Petitioner's majority stockholder agreed to finance this program and, directly or indirectly, advanced $ 900,000 to petitioner evidenced by its demand notes. Petitioner did not put up any security for these notes. No outsider would have made such advances to petitioner. They were subordinated to the claims of a creditor of petitioner. Repayment of such…
1Opinion of the Court
The Commissioner determined deficiencies in the income tax of petitioner, J. A. Maurer, Inc., for the taxable years 1948 and 1949 in the respective amounts of $164,378.50 and $34,520.07.
The deficiencies result from respondent’s determination that a cancellation of $900,000 of petitioner’s notes in 1948 for $400,000 by a majority shareholder in petitioner resulted in taxable income in the amount of $500,000, plus $1,996.97 in accrued and deducted interest on the notes which also was canceled. The deficiency for 1949 results from respondent’s disallowance of a net operating loss deduction of…
2Cases cited11 opinions
- United States v. Kirby Lumber CoSupreme Court of the United States · 1931
- John Kelley Co. v. CommissionerSupreme Court of the United States · 1946
- Commissioner v. JacobsonSupreme Court of the United States · 1949
- Benjamin D. And Madeline Prentice Gilbert v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1957
- Gooding Amusement Co. v. CommissionerUnited States Tax Court · 1954
6 more not listed; retrieve them via the Exa API.
3Cited by30 opinions
- Edward M. Selfe and Jane B. Selfe v. United StatesCourt of Appeals for the Eleventh Circuit · 1985
- American Processing and Sales Company v. The United StatesUnited States Court of Claims · 1967
- Georgia-Pacific Corp. v. CommissionerUnited States Tax Court · 1975
- Road Materials, Inc. v. Commissioner of Internal Revenue, Commissioner of Internal Revenue v. Road Materials, Inc.Court of Appeals for the Fourth Circuit · 1969
- Blum v. CommissionerUnited States Tax Court · 1972
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