Pierce Estates, Inc. v. Commissioner
United States Tax Court
Petitioner, on an accrual basis, issued 30-year 6 per cent income debenture notes to its stockholders. Interest was cumulative and dependent on income. Held, said notes constituted a liability of petitioner and interest paid thereon is deductible but only in the amount due during the taxable year.
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Petitioner, on an accrual basis, issued 30-year 6 per cent income debenture notes to its stockholders. Interest was cumulative and dependent on income. Held, said notes constituted a liability of petitioner and interest paid thereon is deductible but only in the amount due during the taxable year. Held, further, cost of grading a railroad siding and of patching a roof were properly deductible as business expenses for the taxable year, but the cost of replacing a roof was a capital expenditure.
1Opinion of the Court
OPINION.
Rice, Judge:
The first issue is whether certain payments by petitioner corporation represented payments of interest or of dividends. This in turn is dependent upon whether certain securities were a form of indebtedness or were stock. If the payments were interest payments they are deductible by petitioner under section 23 (b) of the Internal Revenue Code, which provides:
SEC. 23. DEDUCTIONS FROM GROSS INCOME.
In computing net income there shall be allowed as deductions:
**»»*«*(b). Interest. — All interest paid or accrued within the taxable year on indebtedness, except * * *.
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2Cases cited9 opinions
- United States v. AndersonSupreme Court of the United States · 1926
- John Kelley Co. v. CommissionerSupreme Court of the United States · 1946
- American National Co. v. United StatesSupreme Court of the United States · 1927
- Helvering v. Richmond, F. & P. R. Co.Court of Appeals for the Fourth Circuit · 1937
- Mullin Bldg. Corp. v. CommissionerUnited States Tax Court · 1947
4 more not listed; retrieve them via the Exa API.
3Cited by21 opinions
- Denver & R. G. W. R. Co. v. CommissionerUnited States Tax Court · 1959
- Pierce Estates, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Third Circuit · 1952
- Portage Plastics Company v. United StatesDistrict Court, W.D. Wisconsin · 1969
- Southeastern Mail Transport, Inc. v. CommissionerUnited States Tax Court · 1992
- Badger Pipe Line Co. v. CommissionerUnited States Tax Court · 1997
16 more not listed; retrieve them via the Exa API.