Thomas Paper Stock Co. v. Commissioner
United States Tax Court
Excess Profits Credit Based on Income -- Base Period Capital Addition -- Reduction of Deficit -- Sec. 435 (f) (2), I. R. C. of 1939 -- Equity Capital -- Sec. 437 (c). -- Earnings of base period left in business which merely reduce deficit resulting from excess of liabilities over assets do not create a capital addition.
1Opinion of the Court
opinion.
Murdock, Judge:
The Commissioner determined a deficiency of $3,103.99 in the income tax of the petitioner for 1950. The only issue for decision is whether the petitioner had a base period capital addition which, would increase its excess profits credit based on income (section 435 (f) (1) and (2), Internal Revenue Code of 1939) where the earnings of the base period years merely reduced the deficit resulting from the excess of liabilities over assets at the beginning of each base period year. The facts have been presented by a stipulation which is adopted as the findings of fact.
The…
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