Cotton States Fertilizer Co. v. Commissioner
United States Board of Tax Appeals
1. Petitioner, in 1934, in order to obtain a loan from the Reconstruction Finance Corporation, executed a written contract containing a provision that so long as the note remained unpaid it would pay no dividends "without the prior written consent of the R.F.C." Petitioner during the taxable year did not ask for or obtain such consent and paid no dividends.
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1. Petitioner, in 1934, in order to obtain a loan from the Reconstruction Finance Corporation, executed a written contract containing a provision that so long as the note remained unpaid it would pay no dividends "without the prior written consent of the R.F.C." Petitioner during the taxable year did not ask for or obtain such consent and paid no dividends. Held, petitioner is entitled to credit under section 26(c)(1), Revenue Act of 1936. 2. In the same written contract petitioner agreed that it would not increase the compensation of its officers without the prior written consent of R.F.C.…
1Opinion of the Court
*753OPINION.
Kern:
The first question presented in this proceeding is whether petitioner is entitled to the credit provided by section 26 (c) (1)- of the Revenue Act of 1936.1 In order to be so entitled, petitioner must show *754(1) a written contract; (2) executed by it before May 1,1936, (3) expressly dealing with the payment of dividends, (4) which would be violated by- its distribution during the taxable year of amounts as dividends. The written contract executed by petitioner in 1934 provided that “applicant will not',' without the prior'written consent of B,. F. C. * * * declare or pay any…
2Cited by2 opinions
- Valspar Corp. v. CommissionerCourt of Appeals for the Second Circuit · 1949
- Cotton States Fertilizer Co. v. CommissionerUnited States Board of Tax Appeals · 1942