Fall River Electric Light Co. v. Commissioner
United States Board of Tax Appeals
1. INCOME - BOND PREMIUM. - Petitioner issued and sold in 1925, $2,000,000 of its first mortgage 5 per cent 20-year bonds, receiving therefor in that year $2,125,400. Held, that the premium received represents taxable income, to be amortized over the life of the bonds. 2. DEDUCTIONS - INTEREST ON BONDS. - Petitioner, in computing net income on its returns for the years 1925, 1926, and 1927, deducted the interest accrued and paid in each of those years on its first mortgage…
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1. INCOME - BOND PREMIUM. - Petitioner issued and sold in 1925, $2,000,000 of its first mortgage 5 per cent 20-year bonds, receiving therefor in that year $2,125,400. Held, that the premium received represents taxable income, to be amortized over the life of the bonds. 2. DEDUCTIONS - INTEREST ON BONDS. - Petitioner, in computing net income on its returns for the years 1925, 1926, and 1927, deducted the interest accrued and paid in each of those years on its first mortgage 20-year bonds issued in 1925 at a premium. Held, that petitioner is entitled, under section 234(a)(3) of the Revenue Act…
1Opinion of the Court
*170OPINION.
Teammell :
The deficiencies here in question were determined by respondent by treating the bond premium as income and including it all in petitioner’s gross income for the calendar year 1925, and also by prorating it over the bond period, and including one-twentieth of it in income for each of the calendar years 1926 and 1927. Respondent admits that this action can not be sustained and that the correct deficiency for 1925 is only one-twentieth of the amount determined, or there are no deficiencies for 1926 and 1927, depending upon whether the bond premium represents income for the year…
2Cases cited9 opinions
- Burnet v. Sanford & Brooks Co.Supreme Court of the United States · 1931
- United States v. IshamSupreme Court of the United States · 1873
- Bowers v. Kerbaugh-Empire Co.Supreme Court of the United States · 1926
- United States v. WoodwardSupreme Court of the United States · 1921
- Ripple v. Mortgage & Acceptance Corp.Supreme Court of North Carolina · 1927
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- Du Pont v. DeputyDistrict Court, D. Delaware · 1938
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