Greer-Robbins Co. v. Commissioner

The petitioning taxpayer, Greer-Robbins Company, seeks review of a decision of the Board of Tax Appeals upholding the Commissioner’s deficiency assessment for the tax year 1935, based upon an accrual of interest to taxpayer, which kept its books on an accrual basis, upon moneys loaned by it to Union Motors, Inc. It is not questioned that the interest in the amount found by the Commissioner was owed by Union Motors, Inc., to taxpayer and had accrued in the tax period in question, or that in ordinary circumstances it would have been a part of taxpayer’s taxable income.

Taxpayer and Union Motors, Inc., are both California corporations. All of the capital stock of the two companies was owned during the year 1935 by the same individuals in the same proportions. The Union Motors, Inc., was engaged in the sale of automobiles and the taxpayer financed the paper of the purchasers. The books of account of both corporations were kept on the accrual basis. The corporations occupied the same quarters and some of the employees of Greer-Robbins Company performed duties for each of the corporations.

At the beginning of the year 1935 Union Motors, Inc., was indebted to Greer-Robbins Company on…