Case ID: bta_6/html/1083-01.html
Source: Caselaw Access Project
Author: {"author": "Littleton :", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Pittsburgh Knife & Forge Co., Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 7464.
    Promulgated April 29, 1927.
    
      W. M. Smith, Esq., for the petitioner.
    
      J. E. Marshall, Esq., for the respondent.
    The Commissioner in his sixty-day notice mailed to the petitioner notified it of his determination in respect of its tax liability as follows:
    Tear. Deficiency.
    1916- $19. 43
    1917- None.
    1918-10,112.14
    1919- 459. 60
    1920- 1,772. 85
    Petitioner assigns two errors — first, that accrued depreciation to December 31, 1916, amounted to $9,282.54 instead of $43,180.16 as determined by the Commissioner and that the amount of $33,897.62 should be restored to invested capital; secondly, that the Commissioner erroneously reduced invested capital for 1918 in the amount of $14,504.65 on account of the computation of a tentative tax of $36,877.24®in determining the amount of current earnings available for the payment of dividends declared and paid within the yeari The Commissioner moved to dismiss the petition in so far as it! related to the year 1917 for the reason that he had not determined a \ deficiency for that year. When the proceeding was called for hear- \ ing petitioner withdrew the allegations of the petition relating to the year 1917 and the error in regard to the Commissioner’s determination of accrued depreciation.
    FINDINGS OF FACT.
    Petitioner is a Pennsylvania corporation with principal office and place of business at Pittsburgh. During the year 1918 petitioner declared and paid cash dividends as follows:
    March 11_$10, 000
    April 8_ 6, 250
    May 13_ 11,250
    June 10_ 6, 875
    July 7_ 10,000
    August 12- 5, 625
    Total_$50, 000
    In determining the amount of current earnings available for the payment of dividends declared and paid during the year 19.18, the Commissioner computed and set aside out of such current earnings a tentative tax upon the income for the year of $36,877.24 resulting in the reduction of invested capital in the amount of $14,504.65.
   OPINION.

Littleton :

Petitioner’s invested capital for 1918 should not have been reduced on account of the tentative tax computed upon the income for the year in determining the amount of current earnings available for the payment of dividends. Appeal of L. S. Ayers & Co., 1 B. T. A. 1135.

Judgment will T>e entered on 15 days' notice, under Rule 50.