Court Opinion

ID: 4630006
Source: CourtListenerOpinion
Date Created: 2020-11-21 03:06:34.596118+00
Date Added: 2024-06-11T08:30:46.917776
License: Public Domain

BELMONT IRON WORKS, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.Belmont Iron Works v. CommissionerDocket No. 10454.United States Board of Tax Appeals6 B.T.A. 722; 1927 BTA LEXIS 3420; April 6, 1927, Promulgated *3420 Lawrence A. Baker, Esq., for the petitioner.  L. C. Mitchell, Esq., for the respondent.  PHILLIPS *722  The petitioner appeals from the determination by the Commissioner of deficiencies of $34,952.74 and $88,208.60 in income and profits taxes for 1917 and 1918, respectively, alleging several errors, all but one of which were waived at the hearing.  The single issue remaining for decision is stated as follows: Invested capital at the beginning of 1917 should not be reduced by the arbitrary inclusion of a tentative tax in arriving at the amount of earnings available for dividends paid February 28, 1917.  FINDINGS OF FACT.  On February 28, 1917, the petitioner paid a dividend of $300,000.  The respondent determined the net income for the year 1917 to be $794,430.83, computed a tentative tax on that amount of $274,420.79, and thereby computed the earnings of the year available for distribution to be $520,010.04.  This amount he prorated over the taxable year, determining the earnings available for distribution on February 28, 1917, to be $85,120.69.  He determined the balance of such dividend, $214,879.31, to have been paid from surplus and reduced*3421  invested capital from and after February 28, 1917, by that amount.  OPINION.  PHILLIPS: The decision in this appeal is controlled by the decision of the Board in the , where it was held that in computing invested capital the earnings available for the payment of a dividend are not to be reduced by a theoretical or tentative tax.  Decision will be entered on 20 days' notice, under Rule 50.