Hercules Gasoline Co. v. Commissioner

This case requires us to construe § 26 (c)1 of the undistributed profits tax law, 49 Stat. 1648, enacted by Congress in 1936. The undistributed profits tax, which was not continued by Congress after 1938, was a surtax at graduated rates upon corporate profits not distributed during the tax year by way of dividends. Section 26 (c) *427allowed credits designed to afford relief where the payment of dividends is prevented by certain contract provisions. Subdivision (c) (1) of the section allowed such a credit where a distribution of earnings would violate a “provision of a written contract executed…