*462 This proceeding involves deficiencies in income and profits tax for the fiscal years ending January 31, 1920 and 1921, in the amounts of $3,588.33 and $885.27, respectively. The petitioner claims that the Commissioner erred in reducing surplus for each of the years by the computation of a tentative tax in the determination of current earnings available for the payment of dividends, and that he also erred in reducing surplus by the amount of the preceding years' income and profits taxes prorated.
FINDINGS OF FACT.
Petitioner is a Connecticut corporation with principal office at New Haven. In determining the amount of current earnings available for the payment of a dividend of $45,000 declared and paid April 9, 1919, the Commissioner computed a tentative tax on the earnings to the date of the declaration and payment of the dividend and reduced surplus in the amount of $12,354.40, representing the excess of the current earnings available for the payment of the dividend after the computation of the tentative tax. The Commissioner likewise reduced surplus for*3505 the fiscal year ending January 31, 1921, in the amount of $18,680.23, through the computation of a tentative tax upon earnings available for the payment of a dividend of $45,000 declared and paid April 21, 1920.
The Commissioner also reduced earned surplus for the fiscal year ending January 31, 1920, in the amount of $29,883.66 on account of the income and profits tax for the preceding year, prorated, and for the fiscal year ending January 31, 1921, he reduced surplus at the beginning of the year in the amount of $25,626.69 on account of additional income and profits tax for years prior to the fiscal year ending January 31, 1920, and in the further amount of $30,835.91 representing the amount of the income and profits tax for the preceding fiscal year, prorated.
OPINION.
LITTLETON: The Commissioner erred in reducing invested capital on account of a tentative tax upon current earnings available for the payment of the two dividends of $45,000 on April 9, 1919, and April 21, 1920. See .
*463 The Commissioner correctly reduced earned surplus in each of the years by the prorated amount of the preceding year's*3506 income and profits tax. .
Judgment will be entered on 15 days' notice, under Rule 50.