All of the time Arcadia is actually a person in the new Federal Domestic Loan Lender and you may Federal Savings and you can Mortgage Insurance Firm

All of the time Arcadia is actually a person in the new Federal Domestic Loan Lender and you may Federal Savings and you can Mortgage Insurance Firm

Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson, Harry Baum, Fred Elizabeth. Youngman and you may Morton Rothschild, Attys., Dept. from Fairness, Washington, D. C., to have respondent.

This new Income tax Courtroom of your own United states rendered the decision redetermining insufficient income tax facing petitioner Arcadia Offers and you can Loan Organization (hereinafter named “Arcadia”) into the many years 1954 and you may 1955 on particular levels of $8, and you can $111,, and its own ounts of debts of one’s left private petitioners as transferees of Arcadia, the brand new functions that have specified that the transferees was basically liable as a result when it comes to outstanding taxes owed and due by the Arcadia.

A mutual petition for review of the choices of Tax Courtroom try fast recorded. The fresh new advice of Tax Courtroom are said in the 34 T.C. 679. That it Legal has legislation under Name 26 You.S.C. § 7482.

Arcadia are planned for the 1927 as the a promise stock relationship pursuant towards laws of your County away from Ca, issuing 250 shares off make sure stock, and you will thereafter persisted a discount and you will mortgage team, throughout the typical and you can typical trend, until the dissolution into December 30, 1955

The basic concern getting ounts deducted off gross income of the Arcadia during the 1952 and you can added to bad debts set-aside and you may Federal Insurance policies put aside, pursuant to help you Sec. 23 of your Interior Funds Password out-of 1939, since amended, twenty six U.S.C. § 23, with regards to computing nonexempt net income for the year, is returned to money from inside the 1954 and 1955 pursuing the Arcadia’s revenue of the fund receivable or other property as of January 2, 1953.

The actual situation is made available to this new Taxation Court towards a good stipulation out of points supplemented of the documentary showcases. The newest salient activities taken from new stipulation are:

Arcadia, just like the a cost savings and you can mortgage association, are excused out-of Government income tax under Sec

101(4) of your own Inner Cash Password away from 1939, twenty six You.S.C. § 101 (4) up until you to definitely area was altered by Sec. 313(e) of Cash Act out of 1951, c. 521, 65 Stat. 452, deleting such difference as of December 29, 1951. Arcadia got accumulated, inside the ages it absolutely was exempt out of income tax, reserves about amount of $167,. The net earnings out-of Arcadia into the taxable seasons 1952 is $259,. Arcadia is titled, under Sec. 23(k) (1) of the Interior Cash Password off 1939, given that revised, in order to subtract from its revenues for 1952 while the a hold for money owed, the total amount equal to the newest decreased of their net income to have that year ($259,), or even the matter ($275,) wherein twelve per centum of its complete deposits or withdrawable accounts from the romantic of such seasons exceeded the sum of the its surplus, undivided profits, and you will reserves by January step 1, 1952, the beginning of its taxable 12 months. Properly, Arcadia credited $18, of the net income getting 1952 to help you their mortgage set aside and you can Government Insurance rates put aside membership, and you will credited the bill of the net income to possess 1952, otherwise $241,, to help you their put aside to possess bad debts account and you may reported no nonexempt earnings to your nonexempt seasons finished December press the link right now 30, 1952.

At the end of 1952, Arcadia’s overall reserves amounted in order to $427, composed of said sums from $167, and you may $259,. Arcadia made no more additions to the reserves getting bad debts. After 1952, the fresh reserve profile was in fact shown getting bookkeeping motives at all times since capital membership toward Arcadia’s guides, along with the main city or web worthy of section of Arcadia’s harmony sheet sets in the way evenly necessary for certain California and you may Government firms.

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