v2280-393

Document Title Page

vs. Comm'r of Internal Bev&tme 11

new corporation shall acquire the same at execu-

tion sale in actions to be brought, if necessary,

against the Pacific Tungsten Company, and out

of any other moneys which the said new cor-

poration may have available for that purpose

it will first pay, etc."

It is held that the agreement is not considered to

be a contract which prohibits payment of dividends

as contemplated by section 26(c)(1) of the Revenue

Act of 1936. It is further held that no credit may

be computed under section 26(c)(2) of said Act,

since the agreement does not expressly deal with

the disposition of earnings and profits of the cur-

rent 3ear. Moreover, the agreement provides that

the debt may be paid from any other fmid available

which might consist of borrowed money or receipts

from sale of capital assets.

COMPUTATION OB^ TAX

Year: 1936

Excess-profits Tax :

Taxable net income $129,207.31

TiCss :

10^ of $2,500,000.00 value of capital stock as

declared in your capital stock tax return for

year ended June 30, 1936 250,000.00

Net income subject to excess-profits tax None

10


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