Grand Rapids Store Equipment Corporation v. Commissioner of Internal Revenue, 5960.
| Decision Date | 27 June 1932 |
| Docket Number | No. 5960.,5960. |
| Citation | 59 F.2d 914 |
| Parties | GRAND RAPIDS STORE EQUIPMENT CORPORATION v. COMMISSIONER OF INTERNAL REVENUE. |
| Court | U.S. Court of Appeals — Sixth Circuit |
J. H. Amberg, of Grand Rapids, Mich. (Butterfield, Keeney & Amberg, of Grand Rapids, Mich., and Jacob S. Seidman, of New York City, on the brief), for petitioner.
Helen R. Carloss, of Washington, D. C. (G. A. Youngquist, Asst. Atty. Gen., and Sewall Key, C. M. Charest, and Harold Allen, all of Washington, D. C., on the brief), for respondent.
Before MOORMAN, HICKS, and HICKENLOOPER, Circuit Judges.
Petitioner is a Michigan corporation with its principal place of business at Grand Rapids. It was incorporated on January 1, 1904, for the purpose of taking over and continuing the business of a partnership theretofore known as the Grand Rapids Show Case Company. Having theretofore built up a lucrative business in the manufacture and installation of cabinets, show cases, and all forms of store equipment, its business in cabinets having pull-out racks for the display of ready-made clothing was seriously threatened by the introduction of a revolving wardrobe manufactured by the Architectural Woodworking Company. An application for letters-patent upon this device was pending, such application having been made by Oscar L. Smith, who, with J. G. McCrorey, owned all the capital stock of the Architectural Woodworking Company.
By an agreement executed in July, 1910, the petitioner purchased all of the assets of the Architectural Woodworking Company, including rights of manufacture under the patent application or any patent which might thereafter be issued thereon. Interferences then pending in the Patent Office were thereupon terminated, and priority of the Smith invention was conceded. The patent issued March 21, 1911, being patent No. 987,183. The consideration paid to McCrorey for his interest in the patent was $85,000, Smith continuing to draw royalties in various amounts ranging from $4.75 to $8.80 per cabinet. The proceedings before the Board of Tax Appeals were for the redetermination of deficiencies in income and profits taxes for the years 1918 to 1921, inclusive, and a proper determination of such taxes depended primarily upon the March 1, 1913, valuation to be placed upon the patent above mentioned. The Board of Tax Appeals fixed this valuation at $200,000. Petitioner claims that the undisputed evidence before the Board of Tax Appeals disclosed a value of $2,500,000, and that the Board therefore erred in fixing a lower value. This contention is based very largely, if not wholly, upon the opinion evidence of petitioner's officers.
The present case is not one such as Ralston Steel Car Co. v. Commissioner, 53 F.(2d) 948 (C. C. A. 6), where the Board of Tax Appeals in effect had denied the taxpayer the right to include the depreciated value of patents in invested capital and to make annual deductions for depreciation, but is one in which the petitioner...
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