Telfair Stockton & Co. v. Commissioner
United States Tax Court
1. Sec. 711 (b) (1) (J) and (K), I. R. C. -- Petitioner deducted a payment of 50 per cent of its yearly profits as an expense attributable to the profits earned during each base period year.
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1. Sec. 711 (b) (1) (J) and (K), I. R. C. -- Petitioner deducted a payment of 50 per cent of its yearly profits as an expense attributable to the profits earned during each base period year. Held, petitioner did not sustain the burden of proving that such payment was abnormal or that the increased payment was not in consequence of an increase in gross income in petitioner's base period. 2. Sec. 722 Relief. -- Petitioner has not established that the actual base period net income was not normal for the purpose of comparison with the income of the tax years, section 722 (a) and (b) ( 5),…
1Opinion of the Court
OPINION.
Issue 1. Section711 (&) (1) (J) and (K) Adjustment,1
Withey, Judge:
During the base period years, February 28, 1937 to 1940, inclusive, petitioner paid the following amounts to Telco Holding Company under the provisions of the March 1,1932, contract:
Feb. 28, 1937_._$3,761.75 .
Feb. 28, 1938_'_ 15,300. 00
Feb. 28, 1939_i_ 10,424.68
Feb. 29, 1940_ 13,704.04
These amounts were deducted each year by petitioner and allowed by respondent in computing its net taxable income. The issue before us is whether in determining petitioner’s excess profits credit under section 713, Internal Revenue Code,…
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