Green Bay & W. R. Co. v. Commissioner
United States Tax Court
Green Bay & Western Railroad Co. had outstanding during the taxable years shares of common stock and certain class A and class B debentures. The debentures had no fixed date of maturity and provided for no fixed rate of annual return. They provided that the holders thereof should "in lieu of interest thereon, participate in the distribution of annual net income" in the manner set out in the debentures.
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Green Bay & Western Railroad Co. had outstanding during the taxable years shares of common stock and certain class A and class B debentures. The debentures had no fixed date of maturity and provided for no fixed rate of annual return. They provided that the holders thereof should "in lieu of interest thereon, participate in the distribution of annual net income" in the manner set out in the debentures. Any disbursements in pursuance of such provisions had to be declared by the board of directors of the corporation in the same manner that dividends on the common stock were declared. It was…
1Opinion of the Court
OPINION.
Black, Judge:
We have but one issue to decide in this proceeding, and that is whether the disbursements made by petitioner Green Bay & Western Railroad Co. in the taxable years 1937 and 1939 on its class A and class B debentures represented interest paid on indebtedness which it owed to the holders of these debentures and therefore were deductible under section 23 (b) of the applicable revenue acts, or whether these disbursements were, as the Commissioner contends, in the nature of dividends paid to the holders of these debentures who were not creditors of the corporation but whose…
2Cited by2 opinions
- Biltchik v. Green Bay & Western RailroadWisconsin Supreme Court · 1947
- Green Bay & W. R. Co. v. CommissionerUnited States Tax Court · 1944