U.S. Court of Appeals for the Third Circuit, 1935

Pennsylvania Indemnity Co. v. COMMISSIONER OF INTERNAL REVENUE

U.S. Court of Appeals for the Third Circuit · Decided March 27, 1935 · Buffington, Davis, Thompson

77 F.2d 92; 15 A.F.T.R. (P-H) 1345; 1935 U.S. App. LEXIS 4503 (Federal Reporter, Second Series)

Counsel

Francis Chapman, Henry S. Drinker, Jr., and Frederick E. S. Morrison, all of Philadelphia, Pa. (Chapman & Chapman and Drinker, Biddle & Reath, all of Philadelphia, Pa., of counsel), for petitioner., Frank J. Wideman, Asst. Atty. Gen., and Arnold Raum and J. Louis Monarch, Sp. Assts. to the Atty. Gen., for respondent.

Cases that cite this one

12 later published cases cite this decision.

Nestle Holdings v. Commissioner (United States Tax Court 1995)
Nestle Holdings, Inc. v. Commissioner Of Internal Revenue (2d Cir. 1998)
Nestlé Holdings, Inc. v. Commissioner (2d Cir. 1998)
Republic Petroleum Corporation v. United States (United States District Court Eastern District of Louisiana 1975)
P & R Investors, Inc. v. Commissioner (United States Tax Court 1963)
Sugarman v. Commissioner (United States Tax Court 1962)
Estate of Skouras v. Commissioner (United States Tax Court 1962)
Interstate Transit Lines v. Commissioner of Int. Rev. (8th Cir. 1942)
Arundel-Brooks Concrete Corp. v. Commissioner of Int. Rev. (4th Cir. 1942)
Majestic Securities Corp. v. Commissioner of Int. Rev. (8th Cir. 1941)
Jenkins v. Bitgood (2d Cir. 1939)
Asiatic Petroleum Co. v. Commissioner of Internal Revenue (2d Cir. 1935)

This list shows which later cases cite this one. It does not say how they treated it, and no review of that has been done. Not a substitute for Shepard’s or KeyCite — verify before relying.

Opinion

PER CURIAM.

The pertinent facts in this income tax case are as follows: The Pennsylvania Indemnity Company acquired in 1930 from its wholly owned subsidiaries certain securities having a then market value of $420,-051, which it immediately sold through brokers for $420,732.25. For those securities the taxpayer paid $666,967.37 to its subsidiaries. The sole question is whether the taxpayer has a right to deduct $247,637.-29 from its gross income, representing the difference between the amount it paid its subsidiaries and the amount ultimately received from resale. The Tax Board held it had no right to deduct; thereupon the taxpayer took this appeal. We are of opinion no error was committed by the board.

The situation was that the financial standing of the taxpayer’s two, wholly owned, subsidiary companies had been, to that extent, impaired by the drop in value of their assets of some $270,000. Evidently with the purpose of restoring such depreciation, the owning company took over the depreciated assets, not at their then market price, but at their original cost price, and immediately sold the same at market price and at a loss of some $246,000. Measured by the ordinary relations of life, it was the old story of a father making good the loss of his son’s business and starting him again with an unimpaired capital. The order of the board is affirmed.

Case-law data current through December 31, 2025. Source: CourtListener bulk data.