Commissioner v. Columbia River Paper Mills

The question presented by the present petition for review arises under the provisions of the Revenue Act of 1936, relating to undistributed profits tax on corporations.

Respondent is a Washington corporation organized in 1923. As amended in 1925 its articles of incorporation provided for an authorized common capital stock of $2,000,-000 divided into 20,000 shares, each having a par value of $100. The articles also authorized issuance of $750,000 shares of 8% cumulative preferred stock divided into 7,500 shares, each having a par value of $100. Respondent’s by-laws as amended provided that the preferred stock was

On April 1, 1927, respondent executed its indenture in the nature of a trust deed to secure payment of its bonds. On September 20, 1932, there was outstanding in the hands of the public bonds having a face value of $800,000. On the date last mentioned, respondent executed a supplemental indenture, by the terms of which it agreed to “pay no cash dividends” with exceptions not important here. The holder of each bond executed an extension agreement, in which it was stated that respondent had agreed to “neither declare nor pay any cash dividends prior to April 1, 1937”, with…