John Kelley Co. v. Commissioner
326 U.S. 521 (1946)

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U.S. Supreme Court

John Kelley Co. v. Commissioner, 326 U.S. 521 (1946)

John Kelley Co. v. Commissioner

No. 36

Argued October 11, 1945

Decided January 7, 1946*

326 U.S. 521


1. Two tax cases turned upon the question whether payments made under certain corporate obligations were interest or dividends. Although the facts were quite similar, the characteristics of the obligations in question and the surrounding circumstances were of such a nature that it was reasonably possible to reach the conclusion

Page 326 U. S. 522

that the payments were interest to creditors in one case and dividends to stockholders in the other case, and the Tax Court so decided.

Held: the conclusions of the Tax Court in such cases should be accepted. Pp. 326 U. S. 526-529.

2. Section 1141(c)(1) of the Internal Revenue Code, which authorizes the circuit court of appeals, upon reviewing a decision of the Tax Court, to affirm it or, if the decision of the Tax Court "is not in accordance with law," to modify or reverse it, leaves to the final determination of the Tax Court all issues which are not clear-cut questions of law. Dobson v. Commissioner, 320 U. S. 489, followed. p. 526.

3. The words "interest" and "dividends," as used in the tax statutes, are well understood, and need no further definition. P. 326 U. S. 530.

146 F.2d 466, reversed; 146 F.2d 809, affirmed.

No. 36. Certiorari, 325 U.S. 843, to review reversal of a decision of the Tax Court, 1 T.C. 457, holding certain payments by the petitioner to be interest on indebtedness and deductible under § 23(b) of the Internal Revenue Code.

No. 47. Certiorari, 325 U.S. 844, to review affirmance of a decision of the Tax Court, 3 T.C. 95, holding certain payments by the petitioner to be dividends on stock and not deductible as interest under § 23(b) of the Internal Revenue Code.

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