The opinion of the court was delivered by: GANEY
This is an action by the Pottstown Finance Company, Inc., against the United States of America, for the recovery of income taxes for the calendar years 1937, 1938 and 1939, which plaintiff asserts were erroneously collected.
The court makes the following
2. Pottstown Finance Company, Inc., hereinafter referred to as the plaintiff, is a corporation organized under the laws of the Commonwealth of Pennsylvania, having its principal place of business at 213 High Street, Pottstown, Pennsylvania, within the Eastern District of Pennsylvania.
3. The plaintiff was incorporated on February 7, 1937 to take over the assets and continue the business theretofore conducted by Maurice Mosheim and Russell R. Tyson as partners, trading under the name of Pottstown Finance Company.
4. The authorized capital of the plaintiff consists of 4,000 shares of debenture preference stock of a par value of $ 50 each and 500 shares of common stock of a par value of $ 100 each. The copy of a debenture preference stock certificate, attached to the Complaint as Exhibit A of Exhibit A is true and correct except that the following provision: 'The debenture preference stock shall mature on December 31, 1967, and on that date become due and payable in full at par plus accumulated unpaid interest, provided that at the discretion of the board of directors the said maturity date may be thereafter extended from time to time for periods of not to exceed twenty years each'.
stamped upon the face of the said certificate was not a part of the debenture preference stock certificates as issued and outstanding during the years 1937, 1938 and 1939. The said provision was placed upon all debenture preference stock certificates pursuant to a resolution of the Board of Directors dated March 12, 1941, a true and correct copy of which is hereto attached and made a part hereof as Exhibit 1
5. On December 31 of each of the taxable years 1937, 1938 and 1939, there were issued and outstanding shares of debenture preference stock of plaintiff as follows:
December 31, 1937 -- $ 119,600
December 31, 1938 -- $ 122,350
December 31, 1939 -- $ 129,500
6. The plaintiff timely filed its corporate income and declared value excess profits tax returns for the calendar years 1937, 1938 and 1939 with Walter J. Rothensies, then Collector of Internal Revenue for the First Collection District of Pennsylvania.
7. In its income tax and declared value excess profits tax returns for the calendar years of 1937, 1938 and 1939, the plaintiff deducted from gross income, in determining taxable net income, the total amount accrued and paid for the respective years on ...