Commissioner v. Spring City Foundry Co.

(after stating the facts as above).

The taxpayer was a Wisconsin corporation engaged in manufacturing automobile eastings. It sold certain of its goods to Cotta Transmission Company of Roekford, Illinois, which company became indebted to it in 1920, in the sum of $39,983.27.

In the fall of 1920 the debtor’s financial breathing became labored. It was unable to meet its obligations and frankly wrote to its creditors asking for a five year extension of credit. Pursuant to this request, the creditors met and appointed a creditors’ committee who in turn selected an auditing company to examine the…