GULF, MOBILE & NORTHERN RAILROAD CO.
v.
HELVERING, COMMISSIONER OF INTERNAL REVENUE
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The Supreme Court affirmed that a railroad company could not deduct amortized bond discount as a business expense on its consolidated income tax return, holding that such amortization deductions were not allowable under applicable tax law. The Court's decision aligned with its ruling in a related case decided the same day addressing the same legal principle regarding bond discount amortization.
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Mr. Justice
Stone delivered the opinion of the Court.
Certiorari was granted in this case “ limited to the question of the right of the taxpayer to deductions on account of amortization of bond discount.” At various dates between 1913 and 1916, Meridian & Memphis Railway Company sold its thirty-year 5% gold bonds at a discount. During the years 1924 to 1926, inclusive, while petitioner was the owner and holder of the entire bond issue, it joined with the Meridian & Memphis in filing consolidated income tax returns as affiliated corporations. In each year the latter deducted from gross income the amortized bond discount. The deductions were disallowed by the Commissioner. His action was sustained by the Board of Tax Appeals, 22 B. T. A. 233, and by the Court of Appeals for the District of Columbia. 71 F. (2d) 953. The question presented is the same as that decided this day in No. 107, Old Mission Portland Cement Co. v. Helvering, ante, p. 289. The judgment of the court below was therefore right and is
Affirmed.
Mr. Justice Butler and Mr. Justice Roberts think the judgment should be reversed.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Cited By
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Commissioner of Internal Revenue v. Idaho Power Co., 418 U.S. 1 (U.S. 1974)…claimed deduction was available for property used in the taxpayer’s trade or business. See also Gulf, M. & N. R. Co. v. Commissioner, 22 B. T. A. 233, 245-247 (1931), aff’d as to other issues, 63 U. S. App. D. C. 244, 71 F. 2d 953 (1934), aff’d, 293 U. S. 295 (1934); Missouri Pacific R. Co. v. Commissioner, 22 B. T. A. 267, 286-287 (1931); Northern Pacific R. Co. v. Helvering, 83 F. 2d 508, 513 (CA8 1936). In a subsequent case, Great Northern R. Co. v. Commissioner, 30 B. T. A. 691 (1934), the Board of…
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S. Natural Gas Co. v. The United States, 412 F.2d 1222 (Ct. Cl. 1969)…ngaged in and materials to be used for new construction constituted a capital expenditure and not a proper deduction in computing taxable net income.” (at 245-46) The case was affirmed as to other issues, 63 App.D.C. 244, 71 F. 2d 953. cert. denied, 293 U.S. 295, 55 S.Ct. 161, 79 L.Ed. 372 (1934). . Defendant’s brief refers to the “Board’s mistaken view that the Commissioner’s unexplained failure to cite the first Great Northern decision meant that he repudiated its authority.” (at 149) . Estate of Sam E.…
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S. Ry. Co. v. Commissioner OF Internal Revenue (three cases), 74 F.2d 887 (4th Cir. 1935)…, however, is definitely settled against the position of the company by the recent decisions of the Supreme Court in Old Mission Portland Cement Co. v. Helvering, 293 U. S. 289, 55 S. Ct. 158, 160, 79 L. Ed.-, and Gulf, M. & N. R. Co. v. Helvering, 293 U. S. 295, 55 S. Ct. 161, 79 L. Ed.-. The distinction is suggested that in the cases cited the bonds were acquired by a member of the affiliated group during the period of affiliation, whereas here the affiliation occurred at the same time as the acquisition…
Authorities Cited
- Helvering v. Gulf (D.D.C. 1934)