Henry Mill & Timber Co. v. Commissioner
United States Board of Tax Appeals
SURTAX ON UNDISTRIBUTED PROFITS - CONTRACTS RESTRICTING DIVIDENDS. - In December 1935, petitioner negotiated a mortgage loan from a bank in the amount of $85,000. Neither the mortgage nor note contained any provision restricting the payment of dividends or disposition of earnings by petitioner during the taxable year 1936, but did require the payment of $6,000 on principal at August 1, 1936, which amount was in excess of petitioner's adjusted net income for computation of…
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SURTAX ON UNDISTRIBUTED PROFITS - CONTRACTS RESTRICTING DIVIDENDS. - In December 1935, petitioner negotiated a mortgage loan from a bank in the amount of $85,000. Neither the mortgage nor note contained any provision restricting the payment of dividends or disposition of earnings by petitioner during the taxable year 1936, but did require the payment of $6,000 on principal at August 1, 1936, which amount was in excess of petitioner's adjusted net income for computation of surtax. On December 12, 1935, petitioner's stockholders held a meeting at which it was agreed that the mortgage money…
1Opinion of the Court
*1074OPINION.
Hill:
This proceeding is for the redetermination of a deficiency-in income tax for the year 1936 in the amount of $536.88. The sole issue submitted for decision is whether or not petitioner is entitled, under section 26 (c) of the Revenue Act of 1936,1 to a credit of at least the amount of its adjusted net income for purposes of computation of the surtax on undistributed profits.
Petitioner is a corporation, organized under the laws of the State of Washington, with its principal office at Tacoma. It filed its income tax return for the year 1936 with the collector of internal revenue for…
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