125 C. Cls. SUIT FOR SALARY-Continued XXX. In a suit to recover an amount representing salary for a period during which he was separated from the Government where the plaintiff claims that his separation was procedurally defective and therefore unlawful and improper; and where there are genuine issues as to material facts involved, granting of summary relief to either party is not proper. Hackett, 831. Federal Civil Procedure →→ 2497. XXXI. Plaintiff's and defendant's motions for summary judgment are denied and the case is referred to a commissioner of the court for further proceedings. Id. Federal Civil Procedure - 2559. SUMMARY JUDGMENT. See Overtime Pay VI, VII. SWISS FEDERAL RAILWAYS. See Eminent Domain I, II, III, IV, V, VI, VII, VIII. TAXES. INCOME TAX. I. (1) Where the assets of a hotel business were transferred to plaintiffs' decedent, Frederick W. Buchholz, by his mother, Christina Buchholz, in 1925, under a contract whereby he agreed to operate the business for his own exclusive benefit, in consideration of his assumption of certain estate and other obligations; and where as a part of the consideration he further agreed that if he predeceased his mother all the assets of the business and all his interest therein would revert to his mother, and the Court of Appeals of the District of Columbia having held that the balance in decedent's account on the books of the hotel at the time of his death in 1944 was not the property of decedent; it is held plaintiffs are entitled to recover the amount paid as income tax thereon for the year in which decedent died. National Metropolitan Bank, 37. II. (2) Decedent, under the agreement, had the right to withdraw the balance in his account on the hotel books at any time for his personal use but the contract, under a decision of the United States District Court and the Court of Appeals, has been interpreted to mean that if decedent had not actually withdrawn the amount prior to his death, his estate 125 C. Cls. TAXES-Continued INCOME TAX-Continued was not entitled to it but upon his death the balance in the account became the property of his mother. Id. III. (3) In accordance with the agreement, decedent paid all the debts of his father's estate, all taxes thereon, all legacies in his father's will, and the expenses of administration, a total of $12,010.97. Where under the agreement, decedent's investment in the business was wiped out on his death, leaving nothing to go to his estate; it is held the amount so paid by decedent represented a loss "incurred in trade or business," within the meaning of Section 23 (e) (1) of the Internal Revenue Code, notwithstanding that an amount in cash in excess thereof was on the books at the time he took over the business. Id. Internal Revenue 605. IV. (4) It is held that neither Section 43, as amended, nor Internal Revenue 605. V. (5) In 1938 plaintiff was appointed by the United States District Court as trustee of the assets of a corporation in a reorganization proceeding under Chapter X of the Bankruptcy Act and in 1939 upon plaintiff's petition to the court he was authorized to make quarterly payments to himself for his services at the rate of $10,000 per quarter from December 8, 1938, which payments were to be in the nature of interim allowances. Pursuant to said order plaintiff received $40,000 in each of the years 1939 and 1940, and $20,000 in 1941 prior to October 9 of that year. On November 6, 1941, the court issued an order decreeing that $200,000 was reasonable compensation for all services rendered by plaintiff as trustee and the balance, amounting to $100,000, was paid to plaintiff in 1941, and was included by plaintiff in his income tax return for 1941. Plaintiff's claim for refund for 1941, on the ground that a portion of the amount received by him in 1941 as trustee represented payment for services rendered in the years 1938, 1939 and 1940, and that he was entitled to treat this money as "back pay" under the provisions of Section 107 (d) of the Internal 125 C. Cls. TAXES-Continued INCOME TAX-Continued Revenue Code, was rejected by the Commissioner of Internal Revenue on the ground that Section 107 (d) was not applicable. It is held that the Commissioner's rejection was proper and plaintiff is not entitled to recover. Wardall, 128. VI. (6) Plaintiff's contention is not sustained that a reorganization under Chapter X is comparable to bankruptcy or receivership, expressly mentioned in the statute, and that the deferment of his compensation was comparable to the deferment of compensation of an employee of an employer who is in bankruptcy or receivership. Id. VII. (7) The reorganization proceedings had no bearing upon plaintiff's employment except to furnish the occasion for his employment. His pay was not "deferred" because the corporation was in reorganization; it was "earned" because the company was in reorganization. Id. Internal Revenue 341. VIII. (8) The legislative history of the Revenue Act of 1943, which added Section 107 (d) to the Code, sustains the court's interpretation of this provision. Statutes 217.2. Id. IX. (9) In a suit for refund of tax paid by the Kansas City Southern Railway which included the income of its wholly owned subsidiary Louisiana & Arkansas Railway Company, in a consolidated income tax return which it filed for its affiliated group for the year 1940, it is held that the plaintiff is entitled to recover. Kansas City Southern Railway, 287. Internal Revenue 562. X. (10) In 1940 the Louisiana & Arkansas Railway made an expenditure for driving poles in its road bed to correct the effects of water pockets. On the evidence adduced and in the circumstances of the case, it is held that this work was in the nature of repairs and maintenance, and its cost was deductible. Id. Internal Revneue 562. XI. (11) The pole-driving work did not constitute a capital improvement. The fact that the replacements, 125 C. Cls. TAXES-Continued INCOME TAX-Continued once made, would be good for many years, is not significant. Id. Internal Revenue 562. XII. (12) The Bureau of Accounts of the Interstate Commerce Commission issued a rule May 1, 1942, in accord with the court's conclusion, holding that the cost of stabilizing the subgrade of roadbeds due to water pockets and mudheaves should be included in the operating expense account. See also Appeal of Illinois Merchants Trust Company, 4 B. T. A. 103; American Bemberg Corporation v. Commissioner, 177 F. 2d 200, affirming 10 T. C. 361. Id. Internal Revenue 562. XIII. (13) Where plaintiff's decedent enlisted in the Enlisted Reserve Corps, Army of the United States, June 29, 1942, and pursuant to orders entered on active duty on January 17, 1943, and was killed in action on May 4, 1944; it is held that decedent was a member of the military forces of the United States within the purview of Section 345 of the Revenue Act of 1951 (65 Stat. 452, 517) and under Section 421 of the Internal Revenue Code plaintiff is entitled to recover on his claim for refund of taxes paid for the year 1942. Chandler King, 320. Internal Revenue 1542. XIV. (14) The legislative history of the applicable statutes does not sustain the defendant's contention that it was the intention of Congress to exclude the Enlisted Reserve Corps from the military forces of the United States. Id. Internal Revenue 1542. XV. (15) Under the applicable statutes all tax relief accorded members of the Armed Forces is not restricted to periods of active service. Id. XVI. (16) In a suit to recover income taxes for the years 1944 and 1945, where the plaintiff asserts the right to carry back to those years a loss sustained by him in 1946 due to the charging off in that year of a bad debt, where it is shown that the deduction of the bad debt was "attributable to the operation of a trade or business regularly carried on by him," it is held that under the applicable statute (26 U. S. C. 122) plaintiff is entitled to recover. Harding, 585. Internal Revenue 669. 125 C. Cls. TAXES-Continued INCOME TAX-Continued XVII. (17) A partnership of which plaintiff was a member found it desirable to secure a broker who would give his first attention to the partnership business and the plaintiff made a loan to a broker to purchase a stock exchange seat for that purpose. The broker was unable to repay the loan in full and plaintiff charged off the balance as a bad debt. It is held that the debt was a business rather than a non-business debt and was deductible in computing the plaintiff's net operating loss. Id. Internal Revenue 605. EXCESS PROFITS TAX. XVIII. (1) In a suit by plaintiff, a common carrier by motorbus, for refund of excess profits tax for the years 1942 and 1943 assessed against and paid by plaintiff, it is held that plaintiff is not entitled to recover. Atlantic Greyhound, 115. XIX. (2) The plaintiff's contention is not sustained that in computing its excess profits tax liability for 1942 and 1943 its base period excess profits net income should be adjusted by disallowing, pursuant to section 711 (b) (1) (E), the cost of repairs to its buses due to accidents during the base period, claiming that such repairs were deductible as "casualty, demolition, and similar losses" under Section 23 (f), rather than as "ordinary and necessary business expenses" under Section 23 (a) (1), and that, consequently, they were not allowable in computing excess profits net income under Section 711 (b) (1) (E). Id. XX. (3) It is held that the deductions for repairs to buses were correctly taken and allowed, under Section 23 (a) (1), in plaintiff's income tax return for the base period year as ordinary and necessary expenses incurred in carrying on its business. Id. Internal Revenue 932. XXI. (4) Bus accidents, with their consequent cost of repairs, are an ordinary and necessary concomitant of carrying on the business which plaintiff operated. Id. Internal Revenue 932. EXCISE TAX XXII. (1) In a suit to recover taxes levied and paid on “Fishing |