Belle-Vue Mfg. Co. v. Commissioner
United States Board of Tax Appeals
1. Substantially all the shares, with voting rights, of a corporation in financial difficulties were transferred in trust to representatives of its principal creditors, and the same persons formed a creditors' committee, which took over the control and management of the business. No provision of the contract expressly forbade the payment of dividends or dealt with the disposition of earnings and profits.
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1. Substantially all the shares, with voting rights, of a corporation in financial difficulties were transferred in trust to representatives of its principal creditors, and the same persons formed a creditors' committee, which took over the control and management of the business. No provision of the contract expressly forbade the payment of dividends or dealt with the disposition of earnings and profits. Held: (a) The mere probability that creditors would not permit a dividend is insufficient to support the credit provided in section 26(c)(1), Revenue Act of 1936. (b) The mere probability…
1Opinion of the Court
*14OPINION.
Steknhagen :
Because of petitioner’s financial difficulties, substantially all of its shares were in 1929 transferred in trust to represent*15atives of its principal creditors with the voting rights. The same persons formed a creditors’ committee and took the control and management of the business. In 1934 the trust was continued for a five-year period, and the creditors agreed to an equal extension of time for payment of the debts. After sustaining steady losses, petitioner made a profit in 1933 and 1934, but made no payment on its notes. It made profits in 1936 and 1931, and paid…
2Cases cited2 opinions
- United States v. StewartSupreme Court of the United States · 1940
- Helvering v. Northwest Steel Rolling Mills, Inc.Supreme Court of the United States · 1940
3Cited by4 opinions
- Belle-Vue Mfg. Co. v. CommissionerUnited States Board of Tax Appeals · 1940
- Connor Lumber & Land Co. v. United StatesDistrict Court, W.D. Wisconsin · 1949
- Helms Bakeries v. CommissionerUnited States Board of Tax Appeals · 1942
- Paris & M. P. R. Co. v. CommissionerUnited States Board of Tax Appeals · 1942