Pittsburgh Knife & Forge Co. v. Commissioner

PITTSBURGH KNIFE & FORGE CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Pittsburgh Knife & Forge Co. v. Commissioner

Docket No. 7464.

United States Board of Tax Appeals

6 B.T.A. 1083; 1927 BTA LEXIS 3319;

April 29, 1927, Promulgated

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W. M. Smith, Esq., for the petitioner.

J. E. Marshall, Esq., for the respondent.

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LITTLETON

The Commissioner in his sixty-day notice mailed to the petitioner notified it of his determination in respect of its tax liability as follows:

Year.	Deficiency.
1916	$19.43
1917	None.
1918	10,112.14
1919	459.60
1920	1,772.85

Petitioner assigns two errors - first, that accrued depreciation to December 31, 1916, amounted to $9,282.54 instead of $43,180.16 as determined by the Commissioner and that the amount of $33,897.62 should be restored to invested capital; secondly, that the Commissioner erroneously reduced invested capital for 1918 in the amount of $14,504.65 on account of the computation of a tentative tax of $36,877.24 in determining the amount of current earnings available for the payment of dividends declared and paid within the year. The Commissioner moved to dismiss the petition in so far as it related to the year 1917 for the reason that he had not determined a deficiency for that year. When the proceeding was called for hearing petitioner withdrew the allegations of the petition relating to the year 1917 and the error in regard to the Commissioner's determination of accrued depreciation.

FINDINGS OF FACT.

Petitioner is a Pennsylvania corporation with principal office and place of business at Pittsburgh. During the year 1918 petitioner declared and paid cash dividends as follows:

March 11	$10,000
April 8	6,250
May 13	11,250
June 10	6,875
July 7	10,000
August 12	5,625
Total	$50,000

In determining the amount of current earnings available for the payment of dividends declared and paid during the year 1918, the Commissioner computed and set aside out of such current earnings a tentative tax upon the income for the year of $36,877.24 resulting in the reduction of invested capital in the amount of $14,504.65.

OPINION.

LITTLETON: Petitioner's invested capital for 1918 should not have been reduced on account of the tentative tax computed upon the income for the year in determining the amount of current earnings available for the payment of dividends. .

Judgment will be entered on 15 days' notice, under Rule 50.