Fraser-Smith Co. v. Commissioner
United States Tax Court
Petitioner drew sight drafts on its customers, payable to its bank, to which it attached bills of lading endorsed in blank. The instruments were delivered to the bank, which credited petitioner's account with the face amount of the drafts and allowed it to draw immediately against that credit. Held, the amounts credited are not borrowed capital within the meaning of section 719 (a) (1) of the Internal Revenue Code.
1Opinion of the Court
OPINION.
HakRON, Judge'.
The chief issue in this proceeding is whether the credits of the face amounts of the drafts, which were accompanied by bills of lading endorsed in blank, which, were made to petitioner’s account by the bank constituted “borrowed capital” as defined by section 719 (a) (1) of the Internal Revenue Code.2
In order to come within the provisions of section 719 (a) (1), the petitioner must establish that there was (1) outstanding indebtedness, which was (2) evidenced by “a bond, note, bill of exchange, debenture, certificate of indebtedness, mortgage, or deed of trust.”…
2Cases cited10 opinions
- Burton v. United StatesSupreme Court of the United States · 1905
- City of Douglas v. Federal Reserve Bank of DallasSupreme Court of the United States · 1926
- Vickers v. Machinery Warehouse & Sales Co.Washington Supreme Court · 1920
- Player Realty Co. v. CommissionerUnited States Tax Court · 1947
- Union Electric Steel Co. v. Imperial BankCourt of Appeals for the Third Circuit · 1923
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3Cited by10 opinions
- Clark v. CommissionerUnited States Tax Court · 1952
- Hunt Foods, Inc. v. CommissionerUnited States Tax Court · 1951
- North American Loan & Thrift Co. v. CommissionerUnited States Tax Court · 1962
- Brizard Co. v. CommissionerUnited States Tax Court · 1957
- North American Finance Corporation of Savannah v. The United StatesUnited States Court of Claims · 1963
5 more not listed; retrieve them via the Exa API.