Case Name: Naval Stores Equipment Co., Petitioner, v. Commissioner of Internal Revenue, Respondent
Court: United States Board of Tax Appeals
Jurisdiction: United States
Decision Date: 1929-06-06
Citations: 16 B.T.A. 938
Docket Number: Docket No. 13003
Parties: Naval Stores Equipment Co., Petitioner, v. Commissioner of Internal Revenue, Respondent.
Judges: 
Reporter: Reports of the United States Board of Tax Appeals
Volume: 16
Pages: 938–939

Head Matter:
Naval Stores Equipment Co., Petitioner, v. Commissioner of Internal Revenue, Respondent.
Docket No. 13003.
Promulgated June 6, 1929.
Camden R. MeAtee, Esq., for the petitioner.
FramJc 8. Easby-Smith, Esq., for the respondent.

Opinion:
OPINION.
Littleton :
The facts establish that the notes here in question were the equivalent of cash when they were paid in for stock. The Commissioner argues that they should not be included in invested capital for the taxable years because they were not paid on the due date and because the interest payments were not kept up, and, therefore, the Board should hold that the notes were not originally bona -fide paid in for stock. Interest accrued on the notes and it appears that the notes, with interest, are now being paid. There is nothing to indicate that the notes were not bona fide paid in, but, on the contrary, all the facts show that they were. The mere fact that the corporation did not enforce payment of the principal and interest promptly upon the due date should not in every case cause the exclusion of the notes from invested capital. The notes were perfectly good and could be enforced at any time. We think under the facts that the Commissioner was in error in excluding the amount of $6,000, represented by the notes, from invested capital for the taxable years. American Steel Co., 1 B. T. A. 839; New Orleans Can Co., 7 B. T. A. 1175.
Decision will be entered under Rule 50.