Bay Poplar Lumber Co. v. Commissioner

Board of Tax Appeals

Bay Poplar Lumber Co. v. Commissioner

12 B.T.A. 1367, 1928 BTA LEXIS 3357

CourtUnited States Board of Tax Appeals

DecidedJuly 16, 1928

DocketDocket No. 12269.

StatusPublished

Cited by1 cases

This text of 12 B.T.A. 1367 (Bay Poplar Lumber Co. v. Commissioner) 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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Bay Poplar Lumber Co. v. Commissioner, 12 B.T.A. 1367, 1928 BTA LEXIS 3357 (bta 1928).

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Opinion

[1369]*1369OPINION.

Littleton :

Petitioner bases its claim for assessment of its profits tax under section 328 of the Bevenue Act'of 1918 upon the ground that there were abnormal conditions affecting its capital and income during 1920 and relies upon the fact that its gross sales in 1920 were much larger than they were in certain prior and subsequent years; [1370]*1370the salaries of its officers were moderate and that none were paid prior to 1918; that the cost of selling its product was small and easily affected and that such conditions had existed for several years, though results prior to 1920 had not been so satisfactory.

The evidence is not sufficient to warrant the Board in holding that there existed in 1920 such abnormal conditions as would entitle petitioner to a computation of its profits tax under section 328 of the Revenue Act of 1918.

All of the officers of .petitioner had and attended to other business than that of petitioner, and there is nothing to indicate that the salaries paid were not adequate, that these officers could have obtained more elsewhere for the same services or that others, equally effective, could not have been obtained for the same salary. Wisconsin Butter & Cheese Co., 10 B. T. A. 852.

The fact that gross sales in 1920 were larger than those in prior and subsequent years does not establish an abnormality in the income. We do not know what the net income or invested capital was during 1920. The provisions of the special assessment sections of the statute do not apply when the tax, computed without the benefit of those sections, is high merely because the corporation earned within the year a higher rate of profit. Petitioner has not sustained the burden of proof of showing error in the 'Commissioner’s refusal to compute its profits tax under the special assessment provisions of the statute.

Judgment will be entered for the respondent.

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[1369]*1369OPINION.

Littleton :

Petitioner bases its claim for assessment of its profits tax under section 328 of the Bevenue Act'of 1918 upon the ground that there were abnormal conditions affecting its capital and income during 1920 and relies upon the fact that its gross sales in 1920 were much larger than they were in certain prior and subsequent years; [1370]*1370the salaries of its officers were moderate and that none were paid prior to 1918; that the cost of selling its product was small and easily affected and that such conditions had existed for several years, though results prior to 1920 had not been so satisfactory.

The evidence is not sufficient to warrant the Board in holding that there existed in 1920 such abnormal conditions as would entitle petitioner to a computation of its profits tax under section 328 of the Revenue Act of 1918.

All of the officers of .petitioner had and attended to other business than that of petitioner, and there is nothing to indicate that the salaries paid were not adequate, that these officers could have obtained more elsewhere for the same services or that others, equally effective, could not have been obtained for the same salary. Wisconsin Butter & Cheese Co., 10 B. T. A. 852.

The fact that gross sales in 1920 were larger than those in prior and subsequent years does not establish an abnormality in the income. We do not know what the net income or invested capital was during 1920. The provisions of the special assessment sections of the statute do not apply when the tax, computed without the benefit of those sections, is high merely because the corporation earned within the year a higher rate of profit. Petitioner has not sustained the burden of proof of showing error in the 'Commissioner’s refusal to compute its profits tax under the special assessment provisions of the statute.

Judgment will be entered for the respondent.

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12 B.T.A. 1367, 1928 BTA LEXIS 3357, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bay-poplar-lumber-co-v-commissioner-bta-1928.

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