Court Opinion

ID: 4594458
Source: CourtListenerOpinion
Date Created: 2020-11-20 19:13:01.106933+00
Date Added: 2024-06-11T09:25:05.617195
License: Public Domain

APPEAL OF THE WEST BAY CO.West Bay Co. v. CommissionerDocket No. 2843.United States Board of Tax Appeals2 B.T.A. 483; 1925 BTA LEXIS 2352; September 8, 1925, Decided Submitted July 7, 1925.  *2352 John A. Kratz, Esq., for the taxpayer.  P. S. Crewe, Esq., for the Commissioner.  *483  Before MARQUETTE and MORRIS.  This is an appeal from the determination of a deficiency in income tax for the year 1919 in the amount of $2,917.30.  The alleged deficiency arises from the Commissioner's reduction of the 1919 opening inventory of an affiliated corporation by $30,000 alleged to represent appreciated value of timber stumpage purchased by the subsidiary from the taxpayer.  FINDINGS OF FACT.  1.  The taxpayer is a corporation with its principal place of business at 100 West Forty-second Street, New York City.  It is a holding company, capitalized at $1,000,000, and during 1919 its assets consisted of $400,000 par value stock of the West Bay Naval Stores & Lumber Co. with which it was affiliated.  2.  In its opening inventory for 1919 the West Bay Naval Stores & Lumber Co. carried an item of $48,959.30 for stumpage.  This represents two purchases of stumpage, one being from the Sale-Davis Co. and the Southern Lumber Co., the other from W. H. Covington & Co., a partnership.  The venders named are in no way affiliated with the West Bay Co. or the West Bay*2353  Naval Stores & Lumber Co.  3.  The Commissioner's reduction of the 1919 opening inventory of the West Bay Naval Stores & Lumber Co. was predicated upon *484  the contention that the stumpage purchases above mentioned were made from the West Bay Co. and that their inventory valuation represented an appreciation of $30,000 over cost.  4.  The West Bay Co. has never owned any stumpage and has never transacted any business, its sole function being that of a holding company.  DECISION.  The deficiency determined by the Commissioner is disallowed.  ARUNDELL not participating.