Valley Tractor & Equipment Co. v. Commissioner
United States Board of Tax Appeals
In December 1936 the board of directors of petitioner met and declared a dividend out of surplus. On or before December 31, 1936, petitioner delivered the dividend checks to its shareholders. On that date petitioner did not have sufficient cash on deposit to meet the face amount of the checks. Petitioner was solvent and made a practice of issuing checks in excess of its balance in the regular course of business, the bank honoring its overdrafts.
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In December 1936 the board of directors of petitioner met and declared a dividend out of surplus. On or before December 31, 1936, petitioner delivered the dividend checks to its shareholders. On that date petitioner did not have sufficient cash on deposit to meet the face amount of the checks. Petitioner was solvent and made a practice of issuing checks in excess of its balance in the regular course of business, the bank honoring its overdrafts. Held, petitioner is entitled to a credit against the undistributed profits surtax for dividends paid equal to the face amount of the checks.
1Opinion of the Court
*313OPINION.
Van Foss an:
The only issue for our determination is whether or not petitioner is entitled to a dividends paid credit for the year 1936. Petitioner contends that it is entitled to credit for a cash dividend paid by check. It maintains that even if we should find that the dividend was not paid in cash, the payment was made in petitioner’s obligations having a value equal to the face amount of the checks. Respondent argues, however, that there was no actual payment of a dividend during the taxable year and, hence, no credit is allowable.
*314The applicable provisions of the statute are…
2Cases cited1 opinion
- Jacobus v. United StatesUnited States Court of Claims · 1934
3Cited by10 opinions
- Bush Bros. & Co. v. CommissionerUnited States Tax Court · 1979
- Royal Mfg. Co. v. CommissionerCourt of Appeals for the Third Circuit · 1943
- Bay Ridge Operating Co. v. CommissionerUnited States Tax Court · 1970
- Bush Bros. & Co. v. CommissionerUnited States Tax Court · 1979
- Duro Persian Mfg. Co. v. CommissionerUnited States Tax Court · 1945
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