United Drug Co. v. Nichols

D. Massachusetts

United Drug Co. v. Nichols

21 F.2d 160, 6 A.F.T.R. (P-H) 6916, 1927 U.S. Dist. LEXIS 1347, 1927 U.S. Tax Cas. (CCH) 7216, 6 A.F.T.R. (RIA) 6916

CourtDistrict Court, D. Massachusetts

DecidedJune 9, 1927

DocketNo. 2731

StatusPublished

This text of 21 F.2d 160 (United Drug Co. v. Nichols) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

United Drug Co. v. Nichols, 21 F.2d 160, 6 A.F.T.R. (P-H) 6916, 1927 U.S. Dist. LEXIS 1347, 1927 U.S. Tax Cas. (CCH) 7216, 6 A.F.T.R. (RIA) 6916 (D. Mass. 1927).

Pincite

Opinion

LOWELL, District Judge.

This was a suit to recover a war excess profits tax paid under protest. The plaintiff bought the assets of the Seamless Rubber Company, and then sold to the public shares of that company at a price greater than it had paid for the assets. The government taxed this excess as a profit. The plaintiff and the Seamless Rubber Company were affiliated companies, within the meaning of the law then in force, which provided that the tax on such companies should be based on the consolidated-returns of net income and invested capital. It seems clear that the sale of the capital stock of the Seamless Rubber Company was “nothing more than a sale by the affiliated group of its own capital stock. The entire proceeds from the sale of this stock represented additional capital to the affiliated group — the investment of the new stockholders who purchased the stock. The sale was a capital transaction, which could not give rise to a taxable gain or deductible loss.” Appeal of Farmers’ Deposit National Bank, 5 B. T. A. 520.

Judgment for plaintiff.

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LOWELL, District Judge.

This was a suit to recover a war excess profits tax paid under protest. The plaintiff bought the assets of the Seamless Rubber Company, and then sold to the public shares of that company at a price greater than it had paid for the assets. The government taxed this excess as a profit. The plaintiff and the Seamless Rubber Company were affiliated companies, within the meaning of the law then in force, which provided that the tax on such companies should be based on the consolidated-returns of net income and invested capital. It seems clear that the sale of the capital stock of the Seamless Rubber Company was “nothing more than a sale by the affiliated group of its own capital stock. The entire proceeds from the sale of this stock represented additional capital to the affiliated group — the investment of the new stockholders who purchased the stock. The sale was a capital transaction, which could not give rise to a taxable gain or deductible loss.” Appeal of Farmers’ Deposit National Bank, 5 B. T. A. 520.

Judgment for plaintiff.

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Bluebook (online)

21 F.2d 160, 6 A.F.T.R. (P-H) 6916, 1927 U.S. Dist. LEXIS 1347, 1927 U.S. Tax Cas. (CCH) 7216, 6 A.F.T.R. (RIA) 6916, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-drug-co-v-nichols-mad-1927.