Nature's Rival Co. v. Commissioner , 6 B.T.A. 294 ( 1927 )

OPINION.

SteRniiagen:

From the evidence it is not possible to decide that the petitioner’s invested capital should include any amount for the alleged good will or other intangible property. The statutory invested capital includes intangible property only when “ paid in for stock or shares.” The evidence clearly shows that the only property paid in for stock or shares at the time of organization was $10,000 cash and merchandise which was paid in for $10,000 of stock. This has been allowed in invested capital by respondent. The evidence is also clear that the intangible property acquired from the Arizona Company and the Form Company was turned in to the petitioner at the same time. It was of such a nature that apart from the business it was of no value and hence it would be idle to argue that it was withheld by the individuals until 1913. And the witnesses testified that it was not withheld but was at once turned in to the new company. This being so, such value as it had could onfy be a paid-in surplus. If so, it was not within the statute. Herald-Despatch Co., 4 B. T. A. 1096. The $40,000 new stock which was issued in 1913 was for earned surplus which was, of course, within invested capital as such, and a stock dividend gave it no new or additional status under the statute. Valdosta Grocery Co., 2 B. T. A. 727. Neither the original minutes nor those covering the 1913 dividend are in evidence and it is difficult to know the true legal significance of what happened. There is also no clear evidence of how the 1913 capitalization was accounted for on the books. In this state of the record, and considering what we l’egard as the probabilities, we must sustain the Commissioner.

Judgment will be entered on 15 days’ notice, under Bule 50.