Geo. Feick & Sons Co. v. Commissioner

*108OPINION.

Tkammell :

The question is whether the amounts of accumulated salaries and dividends which had been credited to the stockholders and which had not been drawn by them for the respective years involved, constituted a part of the invested capital of petitioner.

In order to determine this question, we must decide whether the amounts so credited represented borrowed money in the hands of the corporation or whether it represented assets paid in by the stockholders. If the amounts were borrowed money, it is clear that they can not be included in invested capital. In our opinion, from all of the evidence, the amounts credited by the corporation to its stockholders, represented indebtedness of the corporation. The fact that the corporation retained and used the money in its business when it represented a liability, does not constitute such amount a part of its invested capital. We are not convinced that the stockholders contributed the amounts credited to them to the corporation. There appears to have been no agreement on the part of the stockholders, either among themselves or with the corporation, that they would at no time withdraw the amounts. In our opinion, the decision of this case is controlled by prior decisions of the Board. See Appeal of Kelly-Buckley Co., 1 B. T. A. 1154; Appeal of Consolidated Electric Lamp Co., 1 B. T. A. 616; Appeal of Electrical Supply Co., 1 B. T. A. 658; Appeal of Wm. H. Davidow Sons Co., 1 B. T. A. 1215; Appeals of Roshek Brothers Co., 2 B. T. A. 260; 794; and upon the authority of those decisions we hold that the amounts credited to the officers represented borrowed money. No *109question is raised as to whether funds were available out of which to pay the dividends credited to the stockholders.

On the question of computation of invested capital of the petitioner for the calendar years 1920 and 1921, it is not shown that the respondent committed error in the proration and exclusion from invested capital of the prior years’ taxes.

Judgment will be entered for the respondent.