Merchants Warehouse Company, Inc. v. Commissioner of Internal Revenue

MARTIN, Circuit Judge.

The petitioning taxpayer, Merchants Warehouse Company, Inc., was incorporated under a Tennessee charter on March 4, 1937, to purchase and operate a five-story warehouse building, known as “Cummins Station”, in Nashville, Tennessee. Before the organization of the corporate taxpayer, the warehouse property had been owned by another corporation (Wholesale Merchants Warehouse Company), which had outstanding bonded indebtedness to the amount of $550,000 secured by a deed of trust on the property.

During 1934, Wholesale Merchants Warehouse defaulted in the payment of interest…