Court Opinion

ID: 4631627
Source: CourtListenerOpinion
Date Created: 2020-11-21 03:10:01.852529+00
Date Added: 2024-06-11T07:57:45.196565
License: Public Domain

APPEAL OF THE RAINBOW ROYALTY CO.Rainbow Royalty Co. v. CommissionerDocket No. 3619.United States Board of Tax Appeals3 B.T.A. 71; 1925 BTA LEXIS 2043; November 18, 1925, Decided Submitted November 2, 1925.  *2043 W. B. Washington, C.P.A., for the taxpayer.  Arthur J. Seaton, Esq., for the Commissioner.  *71  Before STERNHAGEN, LANSDON, and ARUNDELL.  This is an appeal from the determination of a deficiency of $2,427.04 in income and profits taxes for 1919.  Originally the taxpayer appealed from the disallowance by the Commissioner of a deduction for depletion, but this was abandoned at the hearing.  The sole question remaining is as to the value of property paid in for stock or shares at the time of incorporation.  The taxpayer claims that its profits tax should be computed under section 301 upon the basis of an invested capital of $100,000, instead of under section 302 as computed by the Commissioner.  FINDINGS OF FACT.  The taxpayer was incorporated some time about 1917.  For $100,000 par value of its capital stock issued at the time of its incorporation it received fractional interests in three oil properties.  These fractional interests had been purchased by several individuals before the organization of the taxpayer, at a price of $50,000.  This *72  purchase had been made within 60 days prior to the transfer to the corporation.  The value of the property*2044  paid in for stock was $50,000.  DECISION.  The deficiency should be computed in accordance with the foregoing findings of fact.  Final determination will be made on 15 days' notice, under Rule 50.