Johnstown Democrat Co. v. Commissioner

Board of Tax Appeals

Johnstown Democrat Co. v. Commissioner

2 B.T.A. 93, 1925 BTA LEXIS 2550

CourtUnited States Board of Tax Appeals

DecidedJune 18, 1925

DocketDocket No. 1647.

StatusPublished

This text of 2 B.T.A. 93 (Johnstown Democrat 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.

Bluebook

Johnstown Democrat Co. v. Commissioner, 2 B.T.A. 93, 1925 BTA LEXIS 2550 (bta 1925).

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Opinion

[95]*95opinion.

Lansdon:

The only issue involved in this appeal is whether good

will of the taxpayer, carried on its books of account in the amount of $98,668.64, had such a value or any value during the years in question. The Commissioner has excluded good will in any amount from his computation of the taxpayer’s, invested capital, alleging that no value of such good will has been proved by the taxpayer either at the date of incorporation or at any subsequent time.

In support of its contention that its good will had value at the-date of the stock issue therefor and at all times thereafter, the taxpayer offered evidence at the hearing that is convincing to the Board.

It is in evidence that the original proffer to sell the assets of the predecessor business to the taxpayer specially included “ going [96]*96value ” as a part of the property offered. The taxpayer has proved that a one-third interest in the assets taken by it in exchange for stock had just previously been sold for a consideration of $50,000 •on a valuation determined by an appraisal by the Orphans Court of Cambria County, Pa. The facts set forth in paragraph 5 of the findings of fact herein show an earning capacity of the taxpayer .sufficient to establish good-will value of at least $47,617.06.

The Associated Press franchise acquired by the taxpayer from the predecessor business and owned and used by it for business purposes ¡from that time certainly has a substantial money value. The president of the taxpayer testified that he considers such franchise worth :at least $50,000, and that he would not sell it for $100,000. The -trade name and circulation of the newspaper published by the taxpayer have considerable value.

In the light of all the evidence, the Board is of the opinion that -the taxpayer is entitled to have the value of good will in the amount of $37,500, the maximum permitted by the statute, included in the .computation of its invested capital for each of the years 1919 and 1920, for the purpose of determining its liability for income and profits taxes for such years.

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[95]*95opinion.

Lansdon:

The only issue involved in this appeal is whether good

will of the taxpayer, carried on its books of account in the amount of $98,668.64, had such a value or any value during the years in question. The Commissioner has excluded good will in any amount from his computation of the taxpayer’s, invested capital, alleging that no value of such good will has been proved by the taxpayer either at the date of incorporation or at any subsequent time.

In support of its contention that its good will had value at the-date of the stock issue therefor and at all times thereafter, the taxpayer offered evidence at the hearing that is convincing to the Board.

It is in evidence that the original proffer to sell the assets of the predecessor business to the taxpayer specially included “ going [96]*96value ” as a part of the property offered. The taxpayer has proved that a one-third interest in the assets taken by it in exchange for stock had just previously been sold for a consideration of $50,000 •on a valuation determined by an appraisal by the Orphans Court of Cambria County, Pa. The facts set forth in paragraph 5 of the findings of fact herein show an earning capacity of the taxpayer .sufficient to establish good-will value of at least $47,617.06.

The Associated Press franchise acquired by the taxpayer from the predecessor business and owned and used by it for business purposes ¡from that time certainly has a substantial money value. The president of the taxpayer testified that he considers such franchise worth :at least $50,000, and that he would not sell it for $100,000. The -trade name and circulation of the newspaper published by the taxpayer have considerable value.

In the light of all the evidence, the Board is of the opinion that -the taxpayer is entitled to have the value of good will in the amount of $37,500, the maximum permitted by the statute, included in the .computation of its invested capital for each of the years 1919 and 1920, for the purpose of determining its liability for income and profits taxes for such years.

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2 B.T.A. 93, 1925 BTA LEXIS 2550, Counsel Stack Legal Research, https://law.counselstack.com/opinion/johnstown-democrat-co-v-commissioner-bta-1925.

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