Reynolds Spring Co. v. Commissioner
United States Tax Court
Prior to the taxable periods involved, petitioner distributed to its stockholders property in kind not out of earnings and profits. Held, in computing petitioner's excess profits tax credit, its basis for determining the amount by which its equity invested capital is to be reduced under section 718 (b) (1) of the Internal Revenue Code is the basis of the property at the time of distribution, which in this case is the cost of acquisition.
1Opinion of the Court
OPINION.
Leech, Judge:
This proceeding involves deficiencies in excess profits tax for the taxable period January 1 to September 30, 1940, and the taxable year ended September 30, 1941, in the respective amounts of $44,437.50 and $63,075.36.
The sole issue is the amount by which petitioner’s equity invested capital for the periods involved is to be reduced by reason of a distribution in kind, not out of accumulated earnings and profits, of the shares of General Leather Co., which cost petitioner $2,412,875.83 in 1924 and had a market value of $742,830 at the time of distribution in 1931.
All of…
Also in this document: Dissent.
2Cases cited2 opinions
- LaBelle Iron Works v. United StatesSupreme Court of the United States · 1921
- R. D. Merrill Co. v. CommissionerUnited States Tax Court · 1945
3Cited by2 opinions
- Consolidated Electronics Industries Corp. v. United StatesUnited States Court of Claims · 1956
- Reynolds Spring Co. v. CommissionerUnited States Tax Court · 1949