Thomas Cusack Co. v. Commissioner

*829 Before STERNHAGEN, GREEN, and LOVE.

The taxpayer appeals from the determination of deficiencies in income taxes for the years 1918 and 1919 in the amounts of $110.74 and $1,162.98, respectively. It is alleged that the Commissioner erroneously excluded from invested capital two items: First, good will $40,000; and second, franchise $40,000. There is no evidence in the record as to the value of the franchise.

From the allegations of the petition which were admitted by the amended answer or by the Solicitor at the hearing, we make the following

FINDINGS OF FACT.

The taxpayer is a Kentucky corporation, with its principal office at Louisville, engaged in the business of outdoor advertising. The present company is the successor of Louisville Gunning System. When the last-named company was reorganized on September 1, 1906, its assets were acquired by the taxpayer for stock, and at the same time the taxpayer assumed and agreed to pay certain liabilities of the old corporation, the most important of which was an obligation to the stockholders incurred by the declaration*2561 of a dividend. The amount of the payment made on account of the dividend was credited to the good-will account. The assets acquired consisted of good will, franchise, bulletin plant, and wall plant. The actual cash value of the good will thus acquired in exchange for stock was $40,000, and stock of the par value of that amount was exchanged therefor.

DECISION.

The deficiency should be computed in accordance with the foregoing findings of fact. Final determination will be settled on 10 days' notice, in accordance with Rule 50.