Athol Mfg. Co. v. Commissioner
United States Board of Tax Appeals
1. Petitioner held not entitled, under the provisions of section 206 of the Revenue Act of 1924, to deduct in 1924 the net losses of a predecessor corporation for 1922 and a part of 1923. 2. Amounts paid out by the petitioner upon obligations of a predecessor corporation, which it assumed as part consideration for the purchase of the assets of the predecessor corporation, constitute capital items and are not deductible from gross income as business expenses. 3. A reasonable…
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1. Petitioner held not entitled, under the provisions of section 206 of the Revenue Act of 1924, to deduct in 1924 the net losses of a predecessor corporation for 1922 and a part of 1923. 2. Amounts paid out by the petitioner upon obligations of a predecessor corporation, which it assumed as part consideration for the purchase of the assets of the predecessor corporation, constitute capital items and are not deductible from gross income as business expenses. 3. A reasonable addition to petitioner's reserve for bad debts in 1924 determined.
1Opinion of the Court
*107OPINION.
Smith :
The petitioner contends that it is entitled, under the provisions of section 206 of the Revenue Act of 1924, to deduct from its *108gross income of that year the net losses of its predecessor company for the first half of 1923 and for 1922. There is no dispute between the parties as to the fact of the losses or the amounts thereof. The controversy is over the question whether the petitioner here is the taxpayer entitled under the statute to the benefits of the deduction.
Section 206 of the Revenue Act of 1924 provides in part as follows:(b) If, for any taxable year, it appears upon…
2Cases cited5 opinions
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- Towne v. EisnerSupreme Court of the United States · 1918
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- Marr v. United StatesSupreme Court of the United States · 1925
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