Opinion
No. 9274.
February 9, 1943. Writ of Certiorari Denied May 3, 1943. See 63 S.Ct. 1031, 87 L.Ed. ___.
Petition to Review Decision of the United States Board of Tax Appeals.
John J. Kendrick, of Toledo, Ohio, for petitioner.
Samuel O. Clark, Jr., J.P. Wenchel, Sewall Key, C.R. Marshall, Helen R. Carloss, and Mamie S. Price, all of Washington, D.C. for respondent.
Before SIMONS, HAMILTON, and MARTIN, Circuit Judges.
It appearing in this cause that the Commissioner of Internal Revenue had re-determined the federal income tax liability of the petitioner for 1937 and asserted a deficiency because of a tax liability upon undistributed profits pursuant to Sec. 26(c)(1) of the Revenue Act of 1936, 26 U.S.C.A. Int.Rev. Acts, page 836, and that the respondent's determination was approved by the Board of Tax Appeals (now the Tax Court of the United States); and it also appearing that the immunity from such taxation was based upon a written contract between the petitioning corporation and its preferred stockholders; and it being the view of the court that under the decision of the Supreme Court in Helvering v. Northwest Steel Rolling Mills, 311 U.S. 46, 61 S. Ct. 143, 85 L.Ed. 408, and of this court in Warren Telephone Co. v. Commissioner, 6 Cir., 128 F.2d 503, and Metal Specialty Co. v. Commissioner, 6 Cir., 128 F.2d 259, such contract is not of the character contemplated by Sec. 14(a)(2) of the Revenue Act of 1936, 26 U.S.C.A. Int.Rev. Acts, page 823; and it being further the view of the court that the amendment to the 1936 Act made by Sec. 501 of the Revenue Act of 1942 does not bring the petitioner within the class exempted from the tax since it is not a deficit corporation as defined by the 1942 amendment to Sec. 26(c) of the Revenue Act of 1936, 26 U.S.C.A. Int.Rev.Acts: It is ordered that the decision of the Board of Tax Appeals be, and it is hereby, affirmed.