John A. Nelson Co. v. Commissioner
United States Board of Tax Appeals
1. Extra compensation based upon a percentage of annual net profits paid to two employees, from whom petitioner had acquired numerous patents and applications for letters patent, held, in the circumstances, to be deductible in the year in which paid. 2. By an original return filed for 1924, the petitioner changed from the accrual to the installment basis of reporting income.
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1. Extra compensation based upon a percentage of annual net profits paid to two employees, from whom petitioner had acquired numerous patents and applications for letters patent, held, in the circumstances, to be deductible in the year in which paid. 2. By an original return filed for 1924, the petitioner changed from the accrual to the installment basis of reporting income. The Commissioner adjusted petitioner's returns for several prior years to the installment basis and refunded the difference in the amount of tax paid upon the accrual basis and the amount computed upon the installment…
1Opinion of the Court
*536OPINION.
Smith:
The petitioner contests the respondent’s disallowance of the deductions claimed by reason of the payment of 5 percent of its net profits to the Sundstrands in each of the taxable years before us. The respondent has treated these amounts as capital expenditures, applying them to the several United States patents, and has allowed deductions for their amortization over the remaining term of the patents. The petitioner argues that the patents had been acquired prior to the payments now in question and that:
* * * Instead * * * of giving the Sundstrands a bonus in some fixed and…
2Cases cited14 opinions
- Rock Island, Arkansas & Louisiana Railroad v. United StatesSupreme Court of the United States · 1920
- Pinellas Ice & Cold Storage Co. v. CommissionerSupreme Court of the United States · 1933
- L. Schepp Co. v. CommissionerUnited States Board of Tax Appeals · 1932
- Smythe v. FiskeSupreme Court of the United States · 1874
- United States v. KelloggCourt of Appeals for the Second Circuit · 1921
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3Cited by5 opinions
- Mead's Bakery, Inc. v. CommissionerUnited States Tax Court · 1964
- Associated Patentees, Inc. v. CommissionerUnited States Tax Court · 1945
- Gant v. CommissionerUnited States Tax Court · 1957
- Innis v. CommissionerUnited States Tax Court · 1945
- John A. Nelson Co. v. CommissionerUnited States Board of Tax Appeals · 1933