Appeal of Walcutt Bros. Co.

Board of Tax Appeals

Appeal of Walcutt Bros. Co.

1 B.T.A. 910

CourtUnited States Board of Tax Appeals

DecidedMarch 30, 1925

DocketDocket No. 1108

StatusPublished

Cited by1 cases

This text of 1 B.T.A. 910 (Appeal of Walcutt Bros. Co.) is published on Counsel Stack Legal Research, covering United States Board of Tax Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Appeal of Walcutt Bros. Co., 1 B.T.A. 910 (bta 1925).

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Opinion

[911]*911OPINION.

Ivins:

The Walcutt Brothers Photo Mount Department, Inc., did business in such a manner that it never paid any dividends; turned over its tangible assets, amounting to $15,697.33 (and its good will, if any), in payment of indebtedness of over $30,000, and was liquidated without any distribution to stockholders. It is apparent that the business was done at a loss. The stockholders lost whatever they had invested and the taxpayer lost at least $15,000. Nevertheless the taxpayer claims that this unsuccessful corporation had a good will worth $15,000, which it acquired in 1914 for the equivalent of cash. To our minds, this corporation, which never made a profit, can not be said to have any good will. The taxpayer lost upwards of $15,000 in 1914 when it settled a claim for upwards of $30,000 by accepting tangibles worth $15,697.33 and a nonexistent or negative good will. The Commissioner was right in excluding the good-will item of the taxpayer’s invested capital and in disallowing the taxpayer’s deduction for loss upon the abandonment of the photo-mount business.

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[911]*911OPINION.

Ivins:

The Walcutt Brothers Photo Mount Department, Inc., did business in such a manner that it never paid any dividends; turned over its tangible assets, amounting to $15,697.33 (and its good will, if any), in payment of indebtedness of over $30,000, and was liquidated without any distribution to stockholders. It is apparent that the business was done at a loss. The stockholders lost whatever they had invested and the taxpayer lost at least $15,000. Nevertheless the taxpayer claims that this unsuccessful corporation had a good will worth $15,000, which it acquired in 1914 for the equivalent of cash. To our minds, this corporation, which never made a profit, can not be said to have any good will. The taxpayer lost upwards of $15,000 in 1914 when it settled a claim for upwards of $30,000 by accepting tangibles worth $15,697.33 and a nonexistent or negative good will. The Commissioner was right in excluding the good-will item of the taxpayer’s invested capital and in disallowing the taxpayer’s deduction for loss upon the abandonment of the photo-mount business.

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