Pennsylvania Indemnity Co. v. COMMISSIONER OF INTERNAL REVENUE

The pertinent facts in this income tax case are as follows: The Pennsylvania Indemnity Company acquired in 1930 from its wholly owned subsidiaries certain securities having a then market value of $420,-051, which it immediately sold through brokers for $420,732.25. For those securities the taxpayer paid $666,967.37 to its subsidiaries. The sole question is whether the taxpayer has a right to deduct $247,637.-29 from its gross income, representing the difference between the amount it paid its subsidiaries and the amount ultimately received from resale. The Tax Board held it had no right to…