Carl Marty & Co. v. Commissioner

2 B.T.A. 465, 1925 BTA LEXIS 2418

• Court: United States Board of Tax Appeals
• Decided: September 7, 1925
• Docket: Docket No. 2883.
• Status: Published

Opinion

This appeal is from a determination of deficiencies in income and profits taxes for the years 1917 and 1918 in the aggregate amount of $4,242.66. The taxpayer claims the inclusion of good will in invested capital, and by its petition seeks special relief under section 210 of the Revenue Act of 1917 and sections 327 and 328 of the Revenue Act of 1918.

No evidence was introduced with reference to the question of special relief, and the same must be considered as waived.

From the pleadings and a stipulation referring to the good-will issue the Board makes the following

FINDINGS OF FAQT.

The taxpayer is an Illinois corporation with its principal office in Monroe.

It was organized in November, 1915, with an authorized capital stock of $10,000, of which $7,500 was issued at incorporation and the remaining $2,500 was issued December 31, 1917.

The taxpayer at organization took over the individual business previously conducted by Carl Marty as a sole proprietorship. Marty acquired the business, one-half in 1908 and the other half in 1914, for the aggregate sum of $120,000 cash, of which $100,000 was paid for the tangible assets and $20,000 for the good will.

The Commissioner permitted, for invested capital purposes, a paid-in surplus for the value of the tangible assets paid in, in excess of the par value of the stock issued therefor, but allowed no value for good will.

No evidence ivas adduced of the actual cash value of intangible property bona fide paid in for stock or shares or of the par value of the stock or shares issued therefor.

The Commissioner determined deficiencies in the aggregate amount of $4,242.66 in income and profits taxes for the years 1917 and 1918. From the determination the taxpayer duly appealed.

DECISION.

The determination of the Commissioner is approved.

Arundell not participating.