Commissioner of Internal Revenue v. Midland Electric Coal Corp.

SPARKS, Circuit Judge.

The Commissioner of Internal Revenue challenges a decision of the Tax Court holding the taxpayer entitled to a credit on its undistributed profits surtax under § 26(c) (1) of the Revenue Act of 1936, 26 U.S.C.A. Int.Rev.Acts, page 835.

November 19, 1935, -the taxpayer negotiated a loan in order to refund an outstanding indebtedness of $1,000,000, executing mortgages to secure it. These mortgages contained the following provision : “Mortgagor agrees that until the notes hereinbefore referred to are paid in full together with all interest due thereon that it will not…