Naval Stores Equipment Co. v. Commissioner

Board of Tax Appeals

Naval Stores Equipment Co. v. Commissioner

16 B.T.A. 938

CourtUnited States Board of Tax Appeals

DecidedJune 6, 1929

DocketDocket No. 13003

StatusPublished

Cited by1 cases

This text of 16 B.T.A. 938 (Naval Stores Equipment 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

Naval Stores Equipment Co. v. Commissioner, 16 B.T.A. 938 (bta 1929).

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Opinion

[939]*939OPINION.

Littleton :

The facts establish that the notes here in question were the equivalent of cash when they were paid in for stock. The Commissioner argues that they should not be included in invested capital for the taxable years because they were not paid on the due date and because the interest payments were not kept up, and, therefore, the Board should hold that the notes were not originally bona -fide paid in for stock. Interest accrued on the notes and it appears that the notes, with interest, are now being paid. There is nothing to indicate that the notes were not bona fide paid in, but, on the contrary, all the facts show that they were. The mere fact that the corporation did not enforce payment of the principal and interest promptly upon the due date should not in every case cause the exclusion of the notes from invested capital. The notes were perfectly good and could be enforced at any time. We think under the facts that the Commissioner was in error in excluding the amount of $6,000, represented by the notes, from invested capital for the taxable years. American Steel Co., 1 B. T. A. 839; New Orleans Can Co., 7 B. T. A. 1175.

Decision will be entered under Rule 50.

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[939]*939OPINION.

Littleton :

The facts establish that the notes here in question were the equivalent of cash when they were paid in for stock. The Commissioner argues that they should not be included in invested capital for the taxable years because they were not paid on the due date and because the interest payments were not kept up, and, therefore, the Board should hold that the notes were not originally bona -fide paid in for stock. Interest accrued on the notes and it appears that the notes, with interest, are now being paid. There is nothing to indicate that the notes were not bona fide paid in, but, on the contrary, all the facts show that they were. The mere fact that the corporation did not enforce payment of the principal and interest promptly upon the due date should not in every case cause the exclusion of the notes from invested capital. The notes were perfectly good and could be enforced at any time. We think under the facts that the Commissioner was in error in excluding the amount of $6,000, represented by the notes, from invested capital for the taxable years. American Steel Co., 1 B. T. A. 839; New Orleans Can Co., 7 B. T. A. 1175.

Decision will be entered under Rule 50.

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Bluebook (online)

16 B.T.A. 938, Counsel Stack Legal Research, https://law.counselstack.com/opinion/naval-stores-equipment-co-v-commissioner-bta-1929.

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