1927 BTA LEXIS 3282 | B.T.A. | 1927
Lead Opinion
The pleadings present but two issues for our determination— (1) whether the petitioner is entitled to personal service classification; (2) if such classification is denied, whether its profits tax should be computed under section 328. At the hearing and by brief, counsel for the petitioner suggested that if personal service classification is denied, then the actual value of its contract with the Coca-Cola Bottling Co. as of the date of incorporation, should be included in invested capital, but no motion to amend the petition so as to include this issue .therein was made. The primary purpose of pleadings is the joinder of issues between the parties. Issues attempted to be raised by brief, or orally at the hearing, will be disregarded. Appeal of Dixie Manufacturing Co., 1 B. T, A. 641; Appeal of W. P. Weaver, 2 B. T. A. 709.
The principal contention of the petitioner is its claim for personal service classification. Where a corporation seeks benefits conferred
Under the contract the petitioner agreed to buy Coca-Cola syrup from the Atlanta Company at $1.20 per gallon which it sold to its subcontractors at prices ranging from $1.35 to $1.50. The differential constituted the petitioner’s profits. In other words it is the difference between what the syrup cost and what it sold for that made the operating profit. Under such circumstances it is our opinion that the petitioner was dealing as a principal.' Considering only the syrup which the petitioner ordered, however, the facts show that the gross income therefrom exceeded that from the syrup ordered by the subcontractors directly from the Atlanta Company, the -figures for the years in question being for 1918, $23,901.20 and $11,471.45, respectively; for 1919, $45,510.70 and $17,915.50, respectively; and for 1920, $25,388.56 and $15,010.99, respectively. To the extent of that business at least there can be no question but that the petitioner was dealing as a principal, and therefore not entitled to personal service classification, as 50 per cent or more of its gross income was derived therefrom.
It also appears that the Commissioner made a comparison with representative concerns and found that the rate of profits tax computed under the provisions of section 302 of the Revenue Act of 1918 is less than that paid by such representative concerns. The petitioner offered no comparatives so we are unable to determine what relief, if any, it would be entitled to, if - its profits tax were computed under section 328 of the Revenue Act of 1918.
Judgment will he entered for the respondent.