The Federal Reporter with Key-Number Annotations, Volume 250: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States, August-October, 1918. Page: 1
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ARGUED AND DETERMINED
UNITED STATES CIRCUIT COURTS OF APPEALS
AND THE DISTRICT COURTS
HOUSTON BELT & TERMINAL RY. CO. v. UNITED STATES.
(Circuit Court of Appeals, Fifth Circuit. April 10, 1918.)
1. INTERNAL REVENUE e:9-COPORATION EXCISE TAX-CORPORATIONS SUB-
JECT TO TAX.
A terminal railway company, organized for the purpose of performing
terminal service for four railroad companies which were its stockholders,
having been legally organized as a corporation capable of earning and
paying dividends, is subject to Corporation Excise Tax Act Aug. 5, 1909,
c. 6, 30 Stat. 112, though the companies owning its stock organized the
terminal company merely to provide a convenient joint agency for the
performance of certain of their duties as carriers without any idea of
deriving a profit.
2. INTERNAL REVENUE <9--CORPORATION EXCISE TAX-"INCOME."
Four railroad companies operating in Texas organized a terminal com-
pany subscribing and paying for its capital stock in equal parts. In
order to finance the organization, it was necessary to borrow a large
sum of money, and, the credit of the terminal company not being sufti-
cient to obtain the needed loan, it was arranged that the several rail-
road companies should pay in equal parts the annual interest and
sinking fund requirements of a loan from a trust company to the ter-
minal company which was to be evidenced by bonds secured by a mort-
gage. Corporation Excise Tax Act Aug. 5, 1909, imposes an excise tax
measured by their net incomes on corporations for the privilege of doing
business in a corporate capacity. Held that, as the title to the property
vested in the terminal company subject to the mortgage and the interest
payments were for its benefit, such interest payments should be treated
as an income for the purpose of ascertaining the amount of the excise
tax; it being immaterial whether the railroad companies were primarily
liable for the interest payment.
[Ed. Note.-For other definitions, see Words and Phrases, First and
Second Series, Income.]
In Error to the District Court of the United States for the Southern
District of Texas; WV\aller T. Burns, Judge.
Action by the United States against the Houston Belt & Terminal
Railway Company. There was a judgment for the United States, and
defendant brings error. Affirmed.
4For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes
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The Federal Reporter with Key-Number Annotations, Volume 250: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States, August-October, 1918., legislative document, 1918; Saint Paul, Minnesota. (digital.library.unt.edu/ark:/67531/metadc38821/m1/16/: accessed January 24, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.