Bangor and Aroostook Railroad Co. v. Commissioner
United States Court of Appeals for the First Circuit
193 F.2d 827 (1951)
Bangor and Aroostook Railroad Company (Bangor) (plaintiff) purchased and cancelled some of its bonds, which produced a bond profit in 1942. Bangor elected to exclude the bond profit from its 1942 tax return under Internal Revenue Code §§ 108 and 1017. However, Bangor included the bond profit in its calculations to reduce its excess profits tax on its 1943 tax return by including it as invested capital under §§ 714 and 718. The commissioner of the Internal Revenue Service (defendant) assessed a deficiency through disallowance of the inclusion of the bond profit in the calculation of excess-profits tax. Bangor appealed the assessment to the United States Tax Court, which affirmed the assessment. Bangor appealed the decision to the United States Court of Appeals for the First Circuit.
Rule of Law
Holding and Reasoning (Magruder, C.J.)
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