Philadelphia Electric Co. v. United States

Plaintiff is a public utility company. In the computation of its surtax net income it seeks to deduct dividends paid by it on some of its stock, which it alleges is preferred stock as defined in section 26 of the Internal Revenue Code. The Commissioner of Internal Revenue disallowed the deduction and plaintiff, having paid the tax computed without it, sues to recover it.

The question presented is whether or not the stock is in fact preferred stock as defined in that section.

Section 15 (as added by sec. 201 of the Revenue Act of 1940, 54 Stat. 516, and amended by sec. 105 (b) of the Revenue Act…