MacLauglin v. Harr

Third Circuit

MacLauglin v. Harr

99 F.2d 638

CourtCourt of Appeals for the Third Circuit

DecidedOctober 25, 1938

DocketNo. 6660

StatusPublished

Cited by5 cases

This text of 99 F.2d 638 (MacLauglin v. Harr) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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MacLauglin v. Harr, 99 F.2d 638 (3d Cir. 1938).

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BUFFINGTON, Circuit Judge.

This somewhat complicated case eventually narrows to an answer to the question of “whether an item of net accrued interest receivable of the taxpayer’s predecessor corporation, all of whose assets the taxpayer acquired in a non-taxable consolidation, when collected by the taxpayer, constitutes income or the recovery of capital to the taxpayer”. Here the interest had accrued at the date of consolidation and the predecessor corporation had reported same as income on its income tax return. The Commissioner of Internal Revenue had eliminated such interest in determining the tax liability of the predecessor corporation. In other words, was the interest thus collected income of the taxpayer or a recovery of capital? The taxing authorities held it was income and collected it from the taxpayer. It paid the same under protest and brought suit in the court below to recover the alleged overpayment, and recovered judgment.

The opinion of the trial court holding it was not income, but a capital asset, comprehensively and satisfactorily discusses at length the questions involved which, by reference thereto, is made part hereof.¹ Agreeing therewith, the judgment of the court below is affirmed.

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BUFFINGTON, Circuit Judge.

This somewhat complicated case eventually narrows to an answer to the question of “whether an item of net accrued interest receivable of the taxpayer’s predecessor corporation, all of whose assets the taxpayer acquired in a non-taxable consolidation, when collected by the taxpayer, constitutes income or the recovery of capital to the taxpayer”. Here the interest had accrued at the date of consolidation and the predecessor corporation had reported same as income on its income tax return. The Commissioner of Internal Revenue had eliminated such interest in determining the tax liability of the predecessor corporation. In other words, was the interest thus collected income of the taxpayer or a recovery of capital? The taxing authorities held it was income and collected it from the taxpayer. It paid the same under protest and brought suit in the court below to recover the alleged overpayment, and recovered judgment.

The opinion of the trial court holding it was not income, but a capital asset, comprehensively and satisfactorily discusses at length the questions involved which, by reference thereto, is made part hereof.¹ Agreeing therewith, the judgment of the court below is affirmed.

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99 F.2d 638, Counsel Stack Legal Research, https://law.counselstack.com/opinion/maclauglin-v-harr-ca3-1938.

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