Camp Mfg. Co. v. Commissioner
United States Tax Court
1. Petitioner, a corporation engaged in manufacturing lumber, subscribed to 50 percent of the capital stock of a new company which proposed to build a paper mill and to become a customer for petitioner's waste and undersized timber. The subscription having depleted petitioner's working capital, it determined to market $ 500,000 worth of the paper mill company's preferred stock.
Read the full summary
1. Petitioner, a corporation engaged in manufacturing lumber, subscribed to 50 percent of the capital stock of a new company which proposed to build a paper mill and to become a customer for petitioner's waste and undersized timber. The subscription having depleted petitioner's working capital, it determined to market $ 500,000 worth of the paper mill company's preferred stock. To do so it was necessary to guarantee the payment of dividends on this stock and its redemption at par. Four years later it paid a sum to the holders of such stock at the rate of $ 5 per share in connection with the…
1Opinion of the Court
OPINION.
Hill, Judge:
The first question presented is whether petitioner is entitled to deduct from its 1940 income the sum of $12,463 paid to procure the release of its contingent liability as guarantor on certain preferred stock of another corporation. Respondent disallowed the deduction. Petitioner contends that he did so erroneously.
Petitioner has been in the business of manufacturing lumber and lumber products since 1887. It found it unprofitable to thus process small and low grade trees and impossible to dispose of its waste. Such trees and waste could be used advantageously for pulpwood…
2Cases cited2 opinions
- Welch v. HelveringSupreme Court of the United States · 1933
- Doyle v. Mitchell Brothers Co.Supreme Court of the United States · 1918
3Cited by26 opinions
- Watson v. CommissionerSupreme Court of the United States · 1953
- Crowell Land and Mineral Corporation v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1957
- Watson v. CommissionerUnited States Tax Court · 1950
- Standard Oil Co. v. CommissionerUnited States Tax Court · 1948
- Hogan v. CommissionerUnited States Tax Court · 1944
21 more not listed; retrieve them via the Exa API.