Oregon-Washington Plywood Company v. Commissioner of Internal Revenue

This is a review of a Tax Court decision which affirmed respondent Commissioner’s determination of a' $19,925.35 deficiency in the excess profit taxes of petitioner for the calendar year 1944. The determination was based on a holding that payments required of petitioner under a contract with Peterman Manufacturing Co, were not “borrowed invested capital” then defined by Section 719(a) (1) of the Internal Revenue Code, 26 U.S.C.A. § 719 (a)' (1) as:

All facts were stipulated and only conclusions of law by the Tax Court are presented for review. In brief, the controlling facts are: By written contract dated August 30, 1943 petitioner purchased a 3,500-acre tract of timberland from Peterman, agreeing to pay therefor $500,000 by cash payments of $100,-000 on or before September 30, 1943 and the balance by monthly payments depending in amount upon the quantity of timber cut and removed per month from the tract by or at the instance of petitioner. On the date it bears, the following executed document was delivered by petitioner to Peterman:

The contract provided that upon default in the payments or other conditions of the contract Peterman could elect either to declare the contract…