Underwriters Service, Inc., a Corporation v. Commissioner of Internal Revenue

Underwriters Service, Inc., hereafter Taxpayer, petitions for a review of a decision of the Tax Court in which the Commissioner’s noticed deficiencies for income and excess profits taxes for the years 1950, 1951 and 1952 were upheld. All of the factual issues have been stipulated to and the question before us is purely a question of law, the proper amount of Taxpayer’s “excess profits net income” for the year 1946. This is relevant to the tax due for the three above years as part of the base period 1946 through 1949 used for purposes of comparison to determine the excess profits taxes due for the period during which the Excess Profits Tax Act of 1950 was in effect.

The Excess Profits Tax Act of 1950 was passed to reach abnormal profits of corporations mainly but not necessarily due to the stimulation of the Korean War. Taxation under this Act is based upon an amount which is Taxpayer’s adjusted excess profits net income minus the Taxpayer’s excess profits credit and it is the calculation of the latter which forms the question for this appeal. There is a further deduction allowed for unused excess profits credits which is not here relevant. The basic section from which excess…