Mercantile Bridge Co. v. Commissioner
United States Tax Court
The petitioner's capital had, in earlier years, been impaired by distributions exceeding earnings and profits. Held, that earnings and profits accumulated thereafter may not be considered as replacing the capital impairment and diminishing earnings and profits, in determining whether, at the close of the years preceding the taxable years, the petitioner had a deficit in accumulated earnings and profits entitling it to a credit, within the meaning of section 501 of the…
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The petitioner's capital had, in earlier years, been impaired by distributions exceeding earnings and profits. Held, that earnings and profits accumulated thereafter may not be considered as replacing the capital impairment and diminishing earnings and profits, in determining whether, at the close of the years preceding the taxable years, the petitioner had a deficit in accumulated earnings and profits entitling it to a credit, within the meaning of section 501 of the Revenue Act of 1942, amending section 26 (c) (3) of the Revenue Act of 1936.
1Opinion of the Court
OPINION.
Disney, Judge:
This cause was remanded to this Court for a rehearing, limited to a consideration of the applicability of section 501 of the Revenue Act of 1942. Pursuant to such mandate, the matter was set for further hearing and was heard on February 17,1943. The question now presented is whether or not the petitioner is entitled for 1936 and 1937 to credits as a deficit corporation, under section 501 of the Revenue Act of 1942. amending section 26 (c) (3) of the Revenue Act of 1936, and providing for a credit by the following language:
(S) Deficit corporations. — In the case of a…
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