Nevada-Massachusetts Co. v. Commissioner

This appeal is from a decision of the Board of Tax Appeals holding that the Petitioner, a Maine corporation with its principal business office in California, was liable for the surtax on undistributed profits for the years 1936 and 1937, as assessed by the Commissioner of Internal Revenue, respondent herein, in the amount of $22,752.16 for 1936 and $12,326.10 for 1937, under § 14 of the Revenue Act of 1936, c. 690, 49 Stat. 1648 , 26 U.S.C.A. Int. Rev.Acts page 823. Petitioner claims a credit on the undistributed profits as provided in § 26(c) (2) of the Revenue Act of 1936, 26 U.S.C.A. Int.Rev.Acts p. 836, which provides :

It is settled that the above section being one granting a deduction must be strictly construed, and that the taxpayer must be able to show that he comes within its terms, Helvering v. Northwest Steel *349 Mills, 311 U.S. 46 , 61 S.Ct. 109 , 85 L.Ed. 29 ; New Colonial Co. v. Helvering, 292 U.S. 435, 440 , 54 S.Ct. 788 , 78 L.Ed. 1348 ; White v. United States, 305 U.S. 281, 292 , 59 S.Ct. 179 , 83 L.Ed. 172 . The facts on which petitioner relies are these:

The agreement further provided:

The effect of the agreement of February 16, 1925, was to incorporate into…