Andrews v. Commissioner
United States Board of Tax Appeals
Petitioners, as holders of certain "6% Convertible Obligations" of the Associated Gas & Electric Co., received in 1936 in payment of accrued interest 4 percent interest-bearing scrip, subordinated in principal to certain senior securities of the company. The scrip had a market value, established by numerous sales, of 35 cents for every dollar of face value. The petitioners were on the cash basis.
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Petitioners, as holders of certain "6% Convertible Obligations" of the Associated Gas & Electric Co., received in 1936 in payment of accrued interest 4 percent interest-bearing scrip, subordinated in principal to certain senior securities of the company. The scrip had a market value, established by numerous sales, of 35 cents for every dollar of face value. The petitioners were on the cash basis. Their agent, who prepared and filed their returns, failed to include this scrip in 1936 in petitioners' income tax returns on advice of counsel. Held, that the scrip constituted taxable income, and…
1Opinion of the Court
*612OPINION.
Kern:
1. Petitioners were the owners of certain “6% Convertible Obligations” of the Associated Gas & Electric Co. It is stipulated by the parties that the terms of these obligations contained “provision for payment of interest by action of the Board of Directors regardless of the existence * * * [of any conditions attached to the pay*613ment of interest], in which case payment may be made in cash and/or ‘securities’ as defined in Board resolution and such payment shall be deemed to the amount of the value of said securities as fixed in such resolution.” The phrase “conditions attached to…
2Cases cited1 opinion
- Robertson v. RoutzahnCourt of Appeals for the Sixth Circuit · 1935
3Cited by1 opinion
- Andrews v. CommissionerUnited States Board of Tax Appeals · 1942