Bagley & Sewall Co. v. Commissioner
United States Tax Court
Petitioner, engaged in the manufacture and sale of paper mill machinery, contracted with the Government of Finland for the manufacture and delivery of such machinery at a cost of approximately $ 1,800,000, the contract specifying that petitioner would deposit in escrow, as a guarantee of performance, $ 800,000 in United States Government bonds.
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Petitioner, engaged in the manufacture and sale of paper mill machinery, contracted with the Government of Finland for the manufacture and delivery of such machinery at a cost of approximately $ 1,800,000, the contract specifying that petitioner would deposit in escrow, as a guarantee of performance, $ 800,000 in United States Government bonds. Petitioner possessed no Government bonds and had no intention of investing therein but, in compliance with the contract obligation, borrowed funds from its bank which, under its direction, bought and held in escrow the bonds in question, and upon…
1Opinion of the Court
OPINION.
Bruce, Judge:
Despondent contends that the United States Government bonds acquired by petitioner for the purpose of being held in escrow to guarantee performance of its contract with the Government of Finland constituted capital assets under the definition of section 117 (a), Internal Revenue Code,1 and that consequently the loss sustained upon their disposition must be treated as a capital loss to be allowed only to the extent of offsetting capital gains, of which petitioner had none, and the deduction taken is subject to elimination. He argues that no matter what petitioner’s purpose…
2Cases cited3 opinions
- Western Wine & Liquor Co. v. CommissionerUnited States Tax Court · 1952
- Clark v. CommissionerUnited States Tax Court · 1952
- Exposition Souvenir Corp. v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1947
3Cited by49 opinions
- Enoch v. CommissionerUnited States Tax Court · 1972
- W. W. Windle Co. v. CommissionerUnited States Tax Court · 1976
- Steadman v. Comm'rUnited States Tax Court · 1968
- Electrical Fittings Corp. v. CommissionerUnited States Tax Court · 1960
- Hoover Co. v. CommissionerUnited States Tax Court · 1979
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