Simplicity Mfg. Co. v. Commissioner
United States Tax Court
Before 1937, petitioner produced cylinder-grinding machines which it sold to automobile repair shops. In 1937 it began making a new product, garden tractors, which it sold to Montgomery Ward. This constituted a change in the character of petitioner's business during the base period under section 722(b)(4). In its contract with Montgomery Ward it agreed to attempt to make improvements in the garden tractor.
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Before 1937, petitioner produced cylinder-grinding machines which it sold to automobile repair shops. In 1937 it began making a new product, garden tractors, which it sold to Montgomery Ward. This constituted a change in the character of petitioner's business during the base period under section 722(b)(4). In its contract with Montgomery Ward it agreed to attempt to make improvements in the garden tractor. In 1939, it produced a riding tractor, which was sold at a loss in 1939, and a new type of garden tractor with front attachments, which was sold in 1940. In 1940, petitioner also produced…
1Opinion of the Court
OPINION.
Haehon, Judge:
It is undisputed that petitioner is a taxpayer who is entitled to use the excess profits credit based on income, and that its manufacture of the conventional garden tractor in 1937, a new product, constituted a chango in the character of its business during the base period within the meaning of section 722 (b) (4) of the 1939 Code.1
In 1939, petitioner obtained a release by Montgomery Ward from the restrictive provision in the 3-year contract whereby petitioner became free to develop its own dealer organization and to sell through its dealers its garden tractors and…
2Cases cited18 opinions
- Wichita Term. El. Co. v. Commissioner of Int. R.Court of Appeals for the Tenth Circuit · 1947
- Lamar Creamery Co. v. CommissionerUnited States Tax Court · 1947
- Avey Drilling Machine Co. v. CommissionerUnited States Tax Court · 1951
- 7-Up Ft. Worth Co. v. CommissionerUnited States Tax Court · 1947
- Irwin B. Schwabe Co. v. CommissionerUnited States Tax Court · 1949
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3Cited by2 opinions
- Photo-Sonics, Inc. v. CommissionerUnited States Tax Court · 1964
- Simplicity Mfg. Co. v. CommissionerUnited States Tax Court · 1960