Theatre Inv. Co. v. Commissioner

Petitioner, Theatre Investment Company, a Washington corporation, seeks reversal *478 of a decision óf the Board of Tax Appeals redetermining claimed deficiencies in respect of petitioner’s income and excess profits taxes for the fiscal year ended June 30, 1936.

On and prior to December 5, 1935, petitioner owned all the stock of North Fourth Development Company, a Washington corporation (hereafter called North Fourth), and all the stock of General Amusement. Company, a Washington corporation (hereafter called General). The cost of the' North Fourth stock to petitioner was $10,-672.53. Prior to December 5, 1935, petitioner made loans aggregating $36,272.41, of which $7,981.60 was loaned to North Fourth and $28,290.81 was loaned to North Fourth or to General. No part of either loan was ever repaid. On December 5, 1935, petitioner-, for a consideration of $62,-871.22, sold the North Fourth stock to Dave Miller and released North Fourth from all indebtedness then due or owing by it to petitioner. Of the $62,871.22 received from Miller, petitioner paid Joseph J. Gottstein $4,733.42 and retained the balance.

For the purpose of determining petitioner’s net gain from the sale of the…