Commissioner of Internal Revenue v. Seaboard Finance Company, Seaboard Finance Company, Cross v. Commissioner of Internal Revenue, Cross

The Commissioner of Internal Revenue filed these consolidated petitions for review of decisions of the Tax Court involving federal income taxes for fiscal years ending in 1955, 1956, 1957 and 1958. The taxpayers, Seaboard Finance Company and fourteen of its subsidiaries (Seaboard), all engaged in the small loan business, filed cross petitions.

The Tax Court had the problem of determining how much, if any, of the amount paid by Seaboard in acquiring other small loan businesses was attrib utable to good will or other elements of value for which depreciation deductions are not allowed. The Commissioner is not satisfied with the way the Tax Court solved that problem. Seaboard’s cross petitions are protective in nature, no affirmative relief being sought if we affirm the Tax Court’s decisions.

During the tax years in question, Seaboard’s program of rapid growth resulted in the purchase of fifty-five small loan businesses. In connection with each purchase the company paid an amount in excess of the face value of the loans outstanding and the fixed assets acquired. Seaboard treated the excess purchase price, referred to herein as the “premium,” as part of the depreciable cost of…