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Keywords

corporation

defendantstatutetrustwillcorporation

Related Cases

U.S. v. General Shoe Corp, 117 F.Supp. 668, 54-1 USTC P 49,019, 45 A.F.T.R. 582

Facts

The United States initiated this action to recover $8,250 in documentary stamp taxes from General Shoe Corporation, a Tennessee corporation. The corporation had entered into loan agreements totaling $7,500,000 with various lenders and issued instruments referred to as 'notes' or 'promissory notes'. These instruments were printed on plain paper, lacked interest coupons, and contained extensive provisions regarding the terms of the loans and the obligations of the corporation.

The defendant is a Tennessee corporation with on office and its principal place of business located at Nashville, Davidson County, Tennessee.

Issue

Whether the instruments issued by General Shoe Corporation were subject to documentary stamp tax as debentures under the Internal Revenue Code.

Whether the instruments executed by corporation were debentures within meaning of the Internal Revenue Code and subject to documentary stamp tax.

Rule

Instruments that meet the definition of debentures under Section 1801 of the Internal Revenue Code are subject to documentary stamp tax.

The instruments delivered by the defendant to Bankers Trust Company… were debentures within the meaning of Section 1801 of the Internal Revenue Code and were, therefore, subject to the documentary stamp tax imposed by that statute.

Analysis

The court analyzed the nature of the instruments issued by General Shoe Corporation, noting that they were referred to as 'promissory notes' but contained characteristics typical of debentures, such as extensive covenants and the absence of interest coupons. The court concluded that these instruments fell within the statutory definition of debentures and were therefore taxable.

The instruments were referred to in the agreements and in the instruments themselves as ‘notes' or as ‘promissory notes'.

Conclusion

The court held that the instruments issued by General Shoe Corporation were indeed debentures and ordered the corporation to pay the documentary stamp taxes owed to the United States.

Judgment will be entered accordingly.

Who won?

The United States prevailed in the case because the court found that the instruments issued by General Shoe Corporation were subject to the documentary stamp tax as debentures under the Internal Revenue Code.

Judgment for the United States.

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Keywords

Related Cases

Lessinger v. C.I.R., 85 T.C. No. 48, 85 T.C. 824, Tax Ct. Rep. (CCH) 42,489

Hubert Enterprises, Inc. v. C.I.R., 230 Fed.Appx. 526, 2007 WL 1244314, 99 A.F.T.R.2d 2007-2528, 2007-1 USTC P 50,494

Dunn & Clark, P.A. v. C.I.R. for and on Behalf of U.S., 57 F.3d 1076, 1995 WL 338811, 75 A.F.T.R.2d 95-2714, 95-2 USTC P 50,383

Demirjian v. Commissioner of Internal Revenue, 54 T.C. 1691

Commissioner of Internal Revenue v. Tufts, 463 U.S. 1215, 103 S.Ct. 3555 (Mem), 77 L.Ed.2d 1401