Appendix — Ivan Allen Co. v. United States

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Supreme Court, U. S.

FILED

APPENDIX JAN 30 1975 |

MICHAEL RODAK, JR, 6.”

In the Supreme Court of the United States

OCTOBER TERM, 1974

No. 74-22

IVAN ALLEN COMPANY,

Petitioner,

VS.

UNITED STATES OF AMERICA,

Respondent.

On WRIT OF CERTIORARI TO

THE UNITED STATES Court oF APPEALS

For THE FirrH CrrcuIt

PETITION FOR CERTIORARI FILED JULY 26, 1974

CERTIORARI GRANTED DECEMBER 16, 1974

BE IED sscnisisnpdemnesnseteseinsnangeinananins ssccpnpiveatsabinddaniaied

Complaint of Ivan Allen Company ............................-..4.

Answer of United States of America .................000--0.--......

SITTIN cchbsccininiuidsteunechasdiienedscenimaesnisodilieel saeshineniies enamel

Exhibit A, Corporate Income Tax Return of Ivan

Allen Company for the Year Ended June 30, 1965

Exhibit B, Corporate Income Tax Return of Ivan

Allen Company for the Year Ended June 30 ,1966

Balance Sheet of Ivan Allen Company As of June 30,

RR nce ssinahanipeiitibacssdialadtidaidalaiatiansabasats

Statement of Income of Ivan Allen Company for the

Year Ended June 30, 1965

Balance Sheet of Ivan Allen Company As of June 30,

ET schvnepbienanmeien ssabeclaessaaaienihenallaaiieedaasiad tadantdacesainameaaastiieaiinedic |

Statement of Income of Ivan Allen Company for the

Year Ended June 30, 1966 ................. siamesaaloenunnadensaléel

Order of the United States District Court for the

Northern District of Georgia Entered October 6, 1972

Judgment of the United States District Court for the

Northern District of Georgia Entered May 3, 1973 ....

Opinion of the United States Court of Appeals for the

Fifth Circuit Dated May 3, 1974

Judgment of the United States Court of Appeals for

the Fifth Circuit Entered May 3, 1974 .

112

115

118

121

124

128

131

137

DOCKET ENTRIES

May 14, 1971 Complaint with Exhibits A, B, C, & D,

filed. Summons issued and delivered to U.S. Marshal.

May 17,1971 Marshal's return on ser. executed 5-17-71

as to U.S. Atty. & executed 5-17-71 via Cert. mail as to Atty.

Gen., filed.

July 15, 1971 ANSWER of def. with DEMAND for a

jury trial, filed.

Aug. 26,1971 Deft’s interrogs. to pltf., filed.

Sep. 21, 1971 4 Month Notice sent to counsel.

Oct. 13, 1971 Def.’s Response to 4 month notice (let-

ter), filed. TO RMS

Oct. 15, 1971 Pltf’s. Response to 4 month notice (let-

ter) with 2 attachment, filed. To RMS.

Nov. 12, 1971 Pitf's Answers to Defts. Interrogs., with

attachments, filed.

Dec. 23, 1971 Notice to counsel requesting PT order

by 1-31-72. (per CAM)

Feb. 3, 1972 Counsel advised PTO now due 3-1-72

(counsel advised ct. settlement possible).

Feb. 11, 1972 Set for jury trial on cal. commencing

3-13-72. Counsel advised.

Feb. 23, 1972 Ext. to 4-1-72 by CAM for submitting

prop. PTO. Off cal. 3-13-72. Counsel advised.

Mar. 14,1972 Request for production of documents un-

der Rule 34, filed.

Mar. 28, 1972 Consent Order extending time thru 4-

20-72 for a Consolidated Pre-Trial Order to be filed, filed.

(Copy to counsel - 3/28/72)

—

Apr. 19, 1972 Deft’s response to pltf’s request for pro-

duction of documents, filed.

Apr. 20,1972 Proposed Consolidated Pre-Trial Order,

Rec'd. TO RMS

Apr. 27, 1972 Deft’s certificate as to production, with

documents, attached, filed.

May 4, 1972 Pitf’s motion for Order compelling dis-

covery under Rule 37 with attachment, filed. To CAM.

Pltf's memo of points & Authorities in support of mo-

tion, filed. To CAM.

May 18, 1872 SUBMITTED ON PLTFS’ MOTION

FOR ORDER COMPELLING DISCOVERY UNDER RULE

37.

May 22,1972 Defts. opposition to pltfs’ motion for or-

der compelling discovery under Rule 37 with memorandum

of points & authorities & exhibits “A” thru “D”, filed.

To CAM.

May 24, 1972 Set for jury trial on cal. commencing

6-19-72 at 10 am. Notice to counsel.

June 8, 1972 ORDER on motion to compell discovery

that Ct. having been informed the prtys. have entered into

a stipulation . .. which may render moot plf.’s motion . . .

ruling deferred pending action by the Ct. on said stipula-

tion, filed. (c. counsel)

June 12,1972 Stipulation with Exhibits A & B, filed.

SUBMITTED PURSUANT TO ORDER OF JUNE 8,

1972 and STIPULATION FILED THIS DAY.

June 14,1972 Case removed from trial cal. for 6-19-72;

Counsel to file briefs as follows: Pltf’s. — due 7-12-72,

Deft’s. reply - due 8-1-72 and P .f's rebuttal - due 8-11-72.

FILE RETURNED - RESUBMIT AFTER 8/11/72. (see

note in file)

July 12,1972 Brief on behalf of taxpayer, Ivan Allen

Co., with Exh. A & B, filed.

July 31, 1972 Trial brief for the deft., filed.

Aug. 11, 1972 Reply brief on behalf of taxpayer Ivan

Allen Company, filed.

Aug. 15, 1972 RESUBMITTED PURSUANT TO EN-

TRY OF JUNE 8, 1972 AND STIPULATION FILED

6/12/72.

Oct. 6, 1972 ORDER filed directing the Government

to refund all accumulated earnings taxes, including interest

thereon, collected for the taxpayer’s fiscal years ending

June 30, 1965 and June 30, 1966. Copy to counsel.

Oct. 18,1972 Stipulation, filed. To CAM for approval.

Oct. 26, 1972 ORDER approving above stipulation &

dismissing issue (Par. 1), deft. has refunded to pltf. the

interest in question, filed. Copy to counsel.

Dec. 18,1972 set for non-jury trial 1-8-73, counsel noti-

fied.

Feb. 9, 1973 set for non-jury trial 2-12-73, counsel noti-

fied.

May 3, 1973 Stipulation, with approval of Court that

the “salary issues” involved be dismissed with prejudice,

each party to bear its own costs with respect thereto, filed.

Copies furnished.

JUDGMENT filed & entered that the pltf. recover from

the deft. the sum of $150,515.85 in accumulated earnings

tax paid to the deft. for the taxable years ended June 30,

1965, and June 30, 1966, plus int. thereon as provided by law

& that the pltf. recover its taxable costs from the deft. to

the extent such costs are attributable to the issue relating

to the accumulated earnings tax involved. Copies furn.

June 28,1973 Defendant's Notice of Appeal, filed. (c.

counsel & USCA w.d.s.)

August 2, 1973 RECORD MAILED ON APPEAL TO

USCA. (ACK lof2)

May 29, 1974 Certified Copy of Judgment from USCA

REVERSING AND REMANDING The judgment of the

U.S. District Court for the additional factual determination

of whether one purpose for the accumulation was to avoid

income tax on behalf of shareholders in accordance with

the opinion of USCA & directing that pltf-appellee pay to

the deft-appellant the costs on appeal to be taxed by USCA,

with copy of Bill of costs in the amount of $199.20, with

opinion rec’d. (TO CAM) (w/file)

June 11,1974 ORDER making mandate the judgment

of the U.S. District Court, filed. Mandate, filed.

Bill of costs taxed in U.S.C.A. against pltf. in sum of

199.20, filed.

Notice to all counsel in compliance with Local Rule

141.4.

Oct. 8, 1974 Notice to counsel requesting consolidated

proposed PTO by 11-1-74.

Oct. 15, 1974 Notice to counsel setting for non-jury

trial 11-4-74.

Oct. 23, 1974 ORDER removing this action from

11/4/74, trial calendar and CONTINUING same pending

the decision of the Supreme Court on pltf’s petition for writ

of certiorari; and counsel for pltf shall notify court upon

receipt of notice of the Supreme Court’s ruling, filed. (Copy

counsel 10/25/74)

IN THE

UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

CIVIL ACTION Ni. 15130

IVAN ALLEN COMPANY,

Piaintiff,

vs.

UNITED STATES OF AMERICA,

Defendant.

COMPLAINT

(Filed May 11, 1971)

COMES NOW IVAN ALLEN COMPANY, plaintiff,

and brings this action against the UNITED STATES OF

AMERICA, defendant, and respectfully shows:

Jurisdiction of this Honorable Court is invoked under

28 U.S.C. §1346(a) (1). This action is a civil action against

the United States of America, for the recovery of internal

revenue taxes erroneously and illegally assessed against

and collected from the said Ivan Allen Company for its

two taxable years beginning July 1, 1964 and ending June

30, 1965 and beginning July 1, 1965 and ending June 30,

1966.

The plaintiff, Ivan Allen Company (hereinafter re-

ferred to as “Taxpayer’”), is a corporation organized and

existing under the laws of the State of Georgia, with its

principal office and place of business in Atlanta, Fulton

County, Georgia, within the Atlanta Division of the North-

ern District of Georgia.

Taxpayer’s claim is for the recovery of $18,752.27 in

principal amount of income taxes and $150,515.85 in prin-

cipal amount of accumulated earnings taxes with the in-

terest assessed thereon, all of which were erroneously and

illegally assessed against and collected from Taxpayer by

the Secretary of the Treasury or his delegate for the tax-

able years of Taxpayer ended June 30, 1965 and June 30,

1966, respectively.

In each of the taxable years in question, Taxpayer

kept its books and prepared its Federal income tax re-

turns on the accrual basis of accounting. Taxpayer filed

its return for each of the said taxable years and paid the

tax shown as due thereon to the District Director of In-

ternal Revenue Atlanta, Georgia.

Upon audit of Taxpayer’s returns for the taxable

years in question, the Secretary of the Treasury or his

delegate determined, but Taxpayer denies, that the sal-

aries which Taxpayer paid Mr. Ivan Allen, Sr. and Mr.

Ivan Allen, Jr. constituted unreasonable compensation

and could not therefore be deducted as ordinary and neces-

sary business expenses under Int. Rev. Code §162(a).

The said Secretary or his delegate further determined, but

Taxpayer denies, that Taxpayer had permitted its earnings

and profits to accumulate beyond the reasonable needs of

its business and that Taxpayer had been formed or availed

of for the purpose of avoiding the income tax with respect

to its shareholders by permitting its earnings and profits

to accumulate instead of being divided or distributed within

the meaning of Int. Rev. Code $532.

As a result of the determinations set out in Paragraph

5 above, the Secretary of the Treasury or his delegate as-

sessed additional income and accumulated earnings taxes

against Taxpayer in the aggregate amount of $87,743.32

for the taxable year 1965 and in the aggregate amount of

$81,520 80. for the taxable year 1966. Interest on said ad-

ditional income and aecumulated earnings taxes was also

assessed against Taxpayer by the said Secretary or his

delegate in the aggregate amount of $24,755.63 for the

taxable year 1965 and in the aggregate amount of $18,108.78

for the taxable year 1966.

Taxpayer paid said additional income and accumulated

earnings taxes to the Director of the Internal Revenue

Service Center, Chamblee, Georgia on or about June l,

1970 and paid the interest on said additional income and

accumulated earnings taxes to the said Director on or about

November 20, 1970. . .

On or about October 19, 1970, within the time provided

by law, Taxpayer duly filed Claims for Refund of the

said amounts of additional income and accumulated earn-

ings taxes assessed against and collected from Taxpayer.

On or about January 4, 1971, within the time provided

by law, Taxpayer duly filed an amendment to the said

Claims for Refund to include a claim for the refund of

the interest assessed against and collected from Taxpayer

on said amounts of additional income and accumulated

earnings taxes. No decision has been rendered on the

said Claims for Refund, as amended, by the Secretary

of the Treasury or his delegate, and more than six months

prior to the filing of this suit have expired from the

date on which the said Claims for Refund were filed.

Copies of the said Claims for Refund for the taxable

years in question and the amendments thereto are attached

hereto, made a part hereof, and marked Exhibits A through

D, respectively. Taxpayer incorporates herein each and

every allegation of fact and each and every contention

set out in the said Claims for Refund and amendments

thereto.

10.

For the reasons stated in Taxpayer’s Claims for Re-

fund, said additional income and accumulated earnings

taxes and the interest thereon were erroneously and il-

legally assessed against and collected from Taxpayer by

the Secretary of the Treasury or his delegate.

11.

No part of the aforesaid $18,752.27 of additional in-

come taxes nor any part of the aforesaid $150,515.85 of

accumulated earnings taxes nor any part of the interest

thereon erroneously and illegally assessed against and col-

lected from Taxpayer by the Secretary of the Treasury

or his delegate for the taxable years in question has been

refunded to Taxpayer.

12.

By virtue of the aforesaid, the defendant United States

of America became and now is indebted to Taxpayer in

the full amount of $212,132.53 with interest thereon as

provided by law.

13.

Taxpayer seeks refund herein of said additional in-

come and accumulated earnings taxes and the interest

thereon erroneously and illegally assessed against and col-

lected from Taxpayer, with interest thereon from the dates

of payment as provided by law, or such greater amount

as may be legally refundable.

14.

Taxpayer has complied with all conditions precedent

to the bringing of this suit.

WHEREFORE, Taxpayer prays that judgment be en-

tered in its favor in the amount of $212,132.53 with interest

thereon as provided by law, or in such greater amount

as may be legally refundable, that the Court grant such

other relief as it may deem proper, and that Taxpayer

be awarded its costs.

King & Spalding

/s/ Kirk A. McAlpin

/s/ Stanley W. Rosenkranz

/s/ Herschel M. Bloom

Attorneys for the Plaintiff

Ivan Allen Company

2500 Trust Company of

Georgia Building

Atlanta, Georgia 30303

404/577-5350

Exhibit A

a: el . eS Oe wee Ones + rertrcrr Tr ietyT ts — oO by

pron leon

- ef . .

' ws i ~~ Ce { ee Li . N

rome Tu PUA WITH THE Ds TICE DEE CTOr WHER s

. ASSLSSMERS ov WAS » MADE OR TAY PAID

The Datutlivet Leeda fon the block bel. the bend of chrom file d onl itl an, where requeed

{ a} Refund of Tones le golly, Crroncously, of Cacessively Collected,

[] Refund of Amount f vid for Stomps Unused, or Used in Error or Excess.

a Abatement of Tax Assessed (not applicoble to cstote, gift, or income taxes).

PLL/ SE TYPE OR PPINT PLAINLY

Nome of toapuyer of porchoser of stomos

_ivan Allen Comp. ny

Number ood street 1 City, tuwn, Stote, Postal dP Code

P.O. Rox 1712 i Atlanta, Georgia 30391

qumintintes A — — ——- =

Filli ine pplice she itens —/. Mach letter size sheet: spose is net su.deient

@ Your socc’ pesurity numdSer | Waite snom ber, if jornt return tr Vf on emp loys, enter “employer Jentifieahon number 7

Se Pe Le a a ee SS lll a

€. District in which retuen (pf ony) wos filed d Nome and oddress show: on return, if different from ebo-e

is ir. Ga.

Dis. Dir. G same Pa avon

e. Period —if for tos reported on onns at 2515, propore seporate form for each toxable qj Kud of tox

from July 1 ee ae 19 64. To June_ 30 65 | Income a

@. Amount of os: «ners }Dotes of poymenr $855.00: 10/1 5/64 4; $885.00: 12/15/04;

_ $252, 127. 62 $)2,125.09:4/15/65; $22. 125.00:6/15/6%5; $60,000:°9/2/65

=| Dute stamps were pu vichese 4 ) Gam a i, Av oun be « funded (It ineowe tou, $ +h ‘18 . 95 21 ‘4/17/65 ;

Government complete competetion below) $91 3 88 ‘ 67 :6/1/70

887.7 t.58 $

— 4 —-— ——— -_—---_

b The « ont bel eves thot Ps « 7 _ shovid Le llc. ed for the folinw ng rectors

See Attached Statement

coNn.: UTATIC’! OF INCOME TAX REFUND Income Tox

qnesnee-eaen — asesen ee —

8 Tox withhold — ‘ ‘ . ‘ =" ‘ ne@oee . a

2. Estrroted tox paid : ‘Ks er rey hel. 4 eee 4 020, _—

3. Tox paid with original return é hg ; 7 eames Fe o.oo ll’ Pe). Oe 4 )

4. Any odditional income tax poid “ae Pie fee FO SAD, SB Aa: 91; ~s 788. 67

5. Total tox poid (Add lines 1-4) wd haere ae a 52, 1 27. 62

6. Less: Your computaticn of correct tox 164, 380. 30

7. Amovnt of overpoy'r: ¢ ‘ is Serer eee. 87,747.32*

8. Amount previously rc! cd a -0-

9. Net overpoyment (Enter in ten i chove) 87, 147.32

Under penaltus of perjury, declare ! thes claum, wnciucing ony occompanying sch duics ond statements, has been ¢ nemined

by me “nd to the bust of my Knowledge end belief it is true end correct

NI icankac dy inbanbiolen pecceuisonaesesesueiaens sbaeeeeecsieses sasécensoawe ,

SEC INSTRUC: 1ONS ou " paveRse

FORT, 883 ( ov. 7-65)

*O: such gre ster amount as may be leaqally refw itble.

STATEMENT ATTACHED TO AND FORMING A PART

OF THE CLAIM OF IVAN ALLEN COMPANY FOR

REFUND OF INCOME AND ACCUMULATED EARN-

INGS TAXES PAID FOR THE TAXABLE YEAR 1965

I. Salary Paid by Taxpayer to Ivan Allen, Sr.

A. Statement of Facts

During the taxable year in question and during all

the years of its existence, Ivan Allen Company (hereinafter

referred to as “Taxpayer’’), was engaged in the office

supply business.

Taxpayer was founded in 1899 by Mr. Ivan Allen,

Sr. and Mr. J. W. Fielder. At that time, the office supply

business was unique, and Ivan Allen, Sr. may well have

been its originator. He was undoubtedly the first in the

southeast to visualize the idea of a department store of

office equipment.

The business prospered in the early 1900’s. and in

1920, Mr. Allen, Sr. was elected President of Taxpayer.

In 1938 he became Chairman of Taxpayer’s Board of Di-

rectors and served in this position until his death.

During a substantial portion of the period in which

he served Taxpayer as President and Chairman of its

Board of Directors, Mr. Allen, Sr. had the primary respon-

sibility for the management and supervision of Taxpayer’s

business and was undoubtedly the major factor in its suc-

cess and growth. Moreover, Mr. Allen, Sr. was responsi-

ble for a number of innovations in the office supply busi-

ness, all of which contributed to Taxpayer’s success. He

originated an inventory control plan, which for years has

been the most widely used plan in the business. With

minor improvements, both the standard accounting forms

and cost of doing business forms which Mr. Allen, Sr.

developed are still being used. He developed the quintup-

let charge and billing system whereby the invoice, charge,

delivery ticket, statistical record and salesman’s slip are

all made in one operation. Finally, Mr. Allen, Sr. was

the first to capitalize on the use of “visual education”

in the business. Indeed, as early as 1923, he suggested

using films to demonstrate the various manufacturing pro-

cesses and facilities connected with the stationer’s industry.

Mr. Allen, Sr. was not only a successful business-

man but also took an active part in numerous civic activi-

ties. He served as President of the Atlanta Chamber of

Commerce, as President of the Southeastern Fair Associa-

tion and was the first President of the Atlanta Convention

Bureau. He served as a member of a small committee

which raised the first substantial funds for the Atlanta

area Boy Scouts and for many years served on the Execu-

tive Committee of the Council of Boy Scouts. Mr. Allen,

Sr. was one of the original members of the Agriculture

and Industrial Development Board of Georgia. He served

as Chairman of the Forward Atlanta Commission, of the

Fulton County Department of Public Welfare, and of a

Committee which raised funds to reestablish Oglethorpe

University. Finally, Mr. Allen, Sr.’s close relationship with

President Franklin D. Roosevelt led to his appointment

as Chairman of the Federal Home Loan Bank in the south-

east and as Chairman of the Franklin D. Roosevelt Warm

Springs Memorial Commission.

Thus, while Mr. Allen, Sr. was implementing the many

innovations in the office supply business which he had

developed, he was also engaged in various civic activities

which drew attention to and created respect for both Tax-

payer and Mr. Allen, Sr. It was this combination of Mr.

Allen, Sr.’s business acumen and his various civic activities

which led to Taxpayer’s growth into a highly successful

company.

Notwithstanding Mr. Allen, Sr.’s role in Taxpayer’s

success, his salary was always extremely modest. Indeed,

throughout his years of service to Taxpayer, Mr. Allen,

Sr. was paid a salary which was always less than Tax-

payer’s leading salesman, and frequently less than sever2]

of Taxpayer’s salesmen.

In 1964, Mr. Allen, Sr. suffered a stroke which cur-

tailed his activities with Taxpayer. At that time, he had

served Taxpayer for more than 64 years, always at a

very modest salary. Even after his sickness, however,

Mr. Allen, Sr. continued to serve Taxpayer in a consulting

capacity. In consideration of his services as a consultant

and for the many years of service in which he was the

major factor in Taxpayer’s development, Taxpayer con-

tinued to pay him the very modest annual salary of

$12,525.16.

Taxpayer deducted the amount of the salary which

it paid to Mr. Allen, Sr. as an ordinary and necessary

business expense for its taxable year 1965. The Commis-

sioner determined, however, that the amount paid to Mr.

Allen, Sr. constituted unreasonable compensation and that

the payment should not therefore have been deducted.

Accordingly, the Commissioner assessed a deficiency

against Taxpayer for its taxable year 1965.

Taxpayer has paid the deficiency. This claim is filed

for the refund of the deficiency so paid, with interest

thereon as provided by law, or such greater amount as

may be legally refundable.

B. Taxpayer’s Contentions

(1) The amount which Taxpayer paid to Mr. Ivan

Allen, Sr. constituted a reasonable salary for both past

and present personal services actually rendered to Tax-

payer within the meaning of Int. Rev. Code §162(a) (1).

The amount which Taxpayer paid to Mr. Allen, Sr. was,

therefore, an ordinary and necessary business expense

within the meaning of Int. Rev. Code §162(a).

(2) Under the contention stated above, the amount

which Taxpayer paid to Mr. Allen, Sr. was properly de-

ducted by Taxpayer under Int. Rev. Code §162(a). Accord-

ingly, the deficiency assessed against and paid by Taxpayer

constitutes an overpayment for which Taxpayer is entitled

to a refund.

II. Salary Paid by Taxpayer to Ivan Allen, Jr.

A. Statement of Facts

Ivan Allen, Jr. was employed by Taxpayer in 1933.

In 1938 he became Secretary-Treasurer of Taxpayer. In

1946 he was elected President of Taxpayer and in 1957

became Vice Chairman of Taxpayer’s Board of Directors.

In 1962, Mr. Allen, Jr. was elected Mayor of the City

of Atlanta and served in this capacity during the taxable

year in question. Although his duties as Mayor limited

the time which Mr. Allen, Jr. was able to spend on Tax-

payer’s routine matters, he continued to serve as Tax-

payer’s chief policy maker. For example, Mr. Allen, Jr.

continued to receive daily communications with respect

to the business problems confronting Taxpayer and often

made daily responses. He continued to review all internal

financial reports, including inventory and sales data, and

was in frequent consultation with Taxpayer’s officers with

respect to merchandising lines, sales, personnel matters,

inventory, accounting, and market extension. Mr. Allen,

Jr. continued to determine both Taxpayer’s sales policies

and the character of its advertising and promotiozal opera-

tions. He also continued his primary decision making role

with respect to Taxpayer’s major expenditures, including

not only capital expenditures but also contributions to

the Ivan Allen Company Foundation and to Taxpayer's

profit sharing plan. In short, Taxpayer made no policy

decision of any significance during the taxable year in

question without first obtaining the advice and approval

of Mr. Allen, Jr.

Even prior to becoming Mayor of Atlanta, Mr. Allen,

Jr., like his father, contributed to Taxpayer’s success by

spending at least one-half of his working time engaged

in civic and outside business activities. Nevertheless, Tax-

payer’s success during these years clearly attest to Mr.

Allen, Jr.’s ability to operate Taxpayer while spending

a substantial portion of his time engaged in activities other

than the management and supervision of Taxpayer's af-

fairs.

In 1948, Taxpayer paid Mr. Allen, Jr. a very modest

salary of $12,000. As his responsibility and value to Tax-

payer grew, Mr. Allen, Jr.’s salary was increased to $30,000.

When Mr. Allen, Jr. became Mayor of Atlanta, however,

Taxpayer recognized that the amount of time that he could

spend on its affairs would be curtailed. Accordingly, be-

ginning in 1962 and including the taxable year in question,

Taxpayer reduced Mr. Allen’s salary to $15,025.08.

During the taxable year 1965, Taxpayer paid its presi-

dent, Mr. W. H. Glenn, a salary of $31,000, approximately

double that of Mr. Allen, Jr. In the same year, nine

of Taxpayer's salesmen received salaries greater than that

of Mr. Allen, Jr.

Taxpayer deducted the amount of the salary which

it paid to Mr. Allen, Jr. as an ordinary and necessary

business expense for its taxable year 1965. The Commis-

sioner determined, however, that the amount paid to Mr.

Allen, Jr. constituted unreasonable compensation and that

the payment was not therefore deductible. Accordingly,

the Commissioner assessed a deficiency against Taxpayer

for its taxable year 1965.

Taxpayer has paid the deficiency. This claim is filed

for the refund of the deficiency so paid, with interest

thereon as provided by law, or such greater amount as

may be legally refundable.

B. Taxpayer’s Contentions

(1) The amount which Taxpayer paid to Mr. Allen,

Jr. constituted a reasonable salary for personal services

actually rendered to Taxpayer within the meaning of Int.

Rev. Code §162(a)(1). The amount which Taxpayer paid

to Mr. Allen, Jr. was, therefore, an ordinary and necessary

business expense within the meaning of Int. Rev. Code

§162(a).

(2) Under the contention stated above, the amount

which Taxpayer paid to Mr. Allen, Jr. was properly de-

ducted by Taxpayer under Int. Rev. Code §162(a). Ac-

cordingly, the deficiency assessed against and paid by Tax-

payer constitutes an overpayment for which Taxpayer is

entitled to a refund.

III. Accumulated Earnings Tax

A. Statement of Facts

Taxpayer’s shareholders as of June 30, 1965 were as

follows:

No. of Shares

Allen, Beaumont 925

Allen, Hugh Inman 2615

Allen, Irene Beaumont 2265

Allen, Ivan Sr. 5650

Allen, Ivan Jr. 4580

Allen, Ivan Jr. Trustee U/W Charles M. Marshall

Allen, Ivan III

Allen, Ivan IV

Allen, Louise R.

Allen, Margaret Poer

Ball, Jack T.

Brumbelow, Morris

Carnes, John

Dickerson, Elmer

Estes, Robert S.

Floyd, W. F. Jr.

Glenn, W. H.

Hampton, James F.

Harris, Andrew D.

Harris, Grady W.

Harris, W. D.

Jones, Hayden C. Jr.

Lanier, D. B.

Layton, Estate of Charles R.

Murphy, J. H.

Ownby, O. G.

Ownby, O. G. Trustee for Roger Paul

Ownby, O. G. Trustee for Scott Alan

Patrick, James H.

Pettes, Thompson P.

Richardson, Walter

Snellings, Walter Arnold

Tebow, D. L.

Williams, J. C.

Wilson, S. W.

Winslow, T. E.

Total

As m operating company, Taxpayer has a readily

ascertainable operating cycle and a need for sufficient

working capital to operate its business through at least

one such cycle. Since Taxpayer’s net liquid assets deter-

mined as of the end of the taxable year in question which

were available for use in meeting its working capital re-

quirements were less than its needs, Taxpayer retained

a portion of its earnings and profits for the taxable year.

For a number of years, including the taxable year

in question, Taxpayer has held certain marketable secu-

rities. Substantially all of these securities, however, were

of corporations engaged in businesses related to that of

Taxpayer. Moreover, since most of the securities had

greatly appreciated in value, Taxpayer would have had

to incur a substantial capital gains tax to convert them

into cash. For these reasons, Taxpayer’s management

viewed the securities as business investments which were

not available either for use in meeting Taxpayer’s reason-

able business needs or for distribution to its shareholders.

However, even if the cost of Taxpayer’s marketable secu-

rities are included in the computation of Taxpayer’s net

liquid assets, the cost of one of Taxpayer's operating cycles

for the taxable year in question was still in excess of

its net liquid assets determined as of the end of the taxable

year.

Taxpayer does not have a history of making loans

to its shareholders and possesses a record of regular and

substantial dividends. Moreover, the income tax conse-

quences to Taxpayer’s shareholders have never been con-

sidered in determining its dividend policy.

Taxpayer's ratio of current assets to current liabilities

for the taxable year in question was extremely small.

Indeed, only a very insignificant amount of Taxpayer's

earnings and profits has ever been invested in assets other

than assets directly related to the operation of Taxpayer’s

business.

Nevertheless, the Commissioner determined that Tax-

payer had accumulated earnings beyond the reasonable

needs of its business and that this accumulation was for

the purpose of avoiding the income tax with respect to

its shareholders. Accordingly, the Commissioner assessed

an accumulated earnings tax deficiency against Taxpayer

for its taxable year 1965.

Taxpayer has paid the deficiency. This claim is filed

for the refund of the deficiency with interest thereon as

provided by law, or such greater amount as may be legally

refundable.

B. Taxpayer's Contentions

(1) The marketable securities which Taxpayer held

and which had substantially appreciated in value were

not available either for use in meeting Taxpayer’s reason-

able business needs or for distribution to its shareholders.

For this reason, the marketable securities are excludable

in computing Taxpayer’s net liquid assets available for

use in its business. The cost of one of Taxpayer’s operat-

ing cycles for the taxable year in question thus exceeded

its net liquid assets available for use in its business deter-

mined as of the end of the taxable year. Consequently,

Taxpayer’s earnings and profits for the taxable year in

question which it retained were not in excess of and were

retained by Taxpayer for the reasonable needs of its busi-

ness, including the reasonably anticipated needs of its busi-

ness, within the meaning of Int. Rev. Code §535(c). Ac-

cordingly, in computing its accumulated taxable income

under Int. Rev. Code §535, Taxpayer is entitled to an

accumulated earnings credit in an amount at least equal

to the amount of its retained earnings and profits for

the taxable year in question (or in such lesser amount

of its earning and profits for the taxable year in question

as may be determined to have been retained by Taxpayer

for the reasonable needs of its business, including the

reasonably anticipated needs of its business. )

(2) Even if the marketable securities held by Tax-

payer are includable in computing Taxpayer’s net liquid

assets available for use in its business, which Taxpayer

denies, the cost of one of Taxpayer’s operating cycles for

the taxable year in question still exceeded its net liquid

assets determined as of the end of the taxable year. Con-

sequently, Taxpayer’s earnings and profits for the taxable

year in question which it retained were not, in excess

of and were retained by Taxpayer for the reasonable needs

of its business, including the reasonably anticipated needs

of its business, within the meaning of Int. Rev. Code

§535(c). Accordingly, in computing its accumulated tax-

able income under Int. Rev. Code 8535, Taxpayer is entitled

to an accumulated earnings credit in an amount at least

equal to the amount of its retained earning and profits

for the taxable year in question (or in such lesser amount

of its earnings and profits for the taxable year in ques-

tion as may be determined to have been retained by Tax-

payer for the reasonable needs of its business, including

the reasonably anticipated needs of its business. )

(3) Even if the earnings and profits which Taxpayer

retained exceeded the reasonable needs of its business,

including the reasonably anticipated needs of its business,

which Taxpayer denies, such excess was not accumulated

by Taxpayer for the purpose of avoiding the income tax

with respect to its shareholders. Taxpayer was not, there-

fore, formed or availed of for the purpose of avoiding

the income tax with respect to its shareholders or the

shareholders of any other corporation by permitting its

earnings and profits to accumulate instead of being divided

and distributed within the meaning of Int. Rev. Code

§532 (a).

(4) Under any of the alternative contentions stated

above, Taxpayer is not subject to an accumulated earnings

tax liability under Int. Rev. Code §531 for the taxable

year in question. Accordingly, the accumulated earnings

tax deficiency assessed against and paid by Taxpayer con-

stitutes an overpayment for which Taxpayer is entitled

to a refund.

Exhibit B

-_- -- - . — — ——_—_— —— TT me 6 emma — we es

= 3 Director's toms

form q's = (Dote reremwo ot

(Rev Wow 1) . . “vr .

Oorete of the eery AMENDED C: rata | FOR nol UND

internal be.emue Of ne

—_—— —-- -_——— eo _ a ee

the In ermal Mevenue Serwce will inchoate om the block below the tind ef claim tiled, and till in, where required.

0 Refund of Amount Paid for Stamps Unused, or Used in Crror or Cxcess.

oO Abatement of Tax Assessed (not applicable to income, estate or gift taxes).

Please Type © or Print Plainly

Name oft taxpoyer or ‘purchaser of stomps

_IVAN Al... EN_COMPANY os

Number and | strect : City of town, State, and 7'P code

P. O. Box 1712 ' Atlanta, Gocorgia 3030)

Fill in applicable | iteMS—Use attachments if necessary

Wife's "s number, f jount return | b. Employer identification number (it any)

2. Your social security number

: : 58-0136820

¢. Name and address shown on return, if different from above

¢. Internal Revenue Service office where re-

turn (it any) was filed

Dist. Dir. Georgia same

e. Periog—it for tax reported On annual basis, prepare separate form for each taxable "E5 f. Kind of tax

from vuly il, Mh June 30, Income

seems fageper TRS ehO AN SO TECEET Dob go

h. h. Date stamps were purchased from Govern. | i Amount to b. refunded -y mcome tax,

ment complete computation below)

$_87,747.32*

k. The claimant believes that this cicim should be ailo. 4 for the following reasons:

BEST COPY AVAILABLE

See Attached Statement

COMPUTATION OF INCOME TAX REFUND Income Tax

f... s Se ee ee ee es ee ee ee ee ee ee ee ee ee ee ee

SGamemestpems. « «see eeueveeevnenseeveeeeene eee © oF 46, 020. 00.

3 Tax paid with original return . o he 114,318, BT

4 Any a =tional income tax paid . “oe a a a oe oe oe ee ee ee ee ee ae oe 91 2788.67

“fe penn net a = 8 s <

6 Less: Yourcomputation of correcttax. . . . 1. «© © © © © © © © © © © © we we }- 4.380.230. —

Sanne... 4 sg 6 6 8 e684 6 eee

8 Amount previously refunded . eoeeeeweeteeveeueeeeeeeees -0-

9 Net overpayment (enter in item i above) — - £ 6 » 6 * » 6 » & 4 + » 2 6 & @ Deed 87, 747 ~32*

Under penalties of perjury, | declare that | have exam: cd this claim, including accompanying schedules and stater .nts,

and to the best of my knowledge and belief it is truc, correct, and complete.

Dated a , : - sdasbtedecuspemaiene , eemeneeniennens

*PiTS assessed interest, TAU ERPS OER on as srovident | ra eit is oY

such aqreater coment AG mMmiv be loual ly Fetundable.

_———— * ——-« - . _— “oom; —+ —— oF ~——Te * ———

STATEMENT AMENDING IVAN ALLEN COMPANY’S

CLAIM FOR REFUND OF INCOME AND ACCUMU-

LATED EARNINGS TAXES PAID FOR THE

TAXABLE YEAR 7/1/64-6/30/65

On October 19, 1970, Ivan Allen Company (herein-

after referred to as “Taxpayer’’) filed a Claim For Refund

(“Claim”) of income and accumulated earnings taxes paid

for its taxable year 1965. This statement is filed to amend

Taxpayer’s previously filed Claim as follows:

(1) The Form 843 previously filed by Taxpayer is

hereby amended in accordance with the Form 843 attached

hereto and styled “Amended Claim for Refund.”

(2) The “STATEMENT ATTACHED TO AND

FORMING A PART OF THE CLAIM OF IVAN ALLEN

COMPANY FOR REFUND OF INCOME AND ACCUMU-

LATED EARNINGS TAXES PAID FOR THE TAXABLE

YEAR 1965” is hereby amended as follows:

(a) PAGE 4, SECOND FULL PARAGRAPH, which

reads:

“Taxpayer has paid the deficiency. This

claim is filed for refund of the deficiency

so paid, with interest thereon as provided by

law, or such greater amount as may be legally

refundable.”

is hereby amended to read as follows (changes

italicized) :

“Taxpayer has paid the deficiency with in-

terest thereon. This claim is filed for the

refund of the deficiency and interest so paid,

with interest thereon as provided by law, or

such greater amount as may be legally re

fundable.”’

(b) PAGE 4, CONTENTION (2) is hereby amended

to read as follows (changes italicized):

“(2) Under the contention stated above, the

amount which ‘laxpayer paid to Mr. Allen,

Sr. was properly deducted by taxpayer un-

der Int. Rev. Code §162(a). Accordingly, the

deficiency and interest thereon assessed

against and paid by Taxpayer constitutes an

overpayment for which Taxpayer is entitled

to a refund.”

“Taxpayer has paid the deficiency. This

claim is filed for the refund of the deficiency

so paid, with interest thereon as provided by

law, or such greater amount as may be le-

gally refundable.”

is hereby amended to read as follows (changes

italicized) :

“Taxpayer has paid the deficiency with in-

terest thereon. This claim is filed for the

refund of the deficiency and interest so paid,

with interest thereon as provided by law, or

such greater amount as may be legally re-

fundable.”

(d) PAGE 8, CONTENTION (2) is hereby amended

to read as follows (changes italicized):

“(2) Under the contention stated above, the

amount which Taxpayer paid to Mr. Allen,

Jr. was properly deducted by Taxpayer under

Int. Rev. Code §162(a). Accordingly, the de-

ficiency and interest thereon assessed against

and paid by Taxpayer constitutes an overpay-

ment for which Taxpayer is entitled to a re-

fund.

(e) PAGE 10, SECOND PARAGRAPH, which reads:

“For a number of years, including the taxable

year in question, Taxpayer has held certain

marketable securities. Substantially all of

these securities, however, were of corporations

engaged in businesses related to that of Tax-

payer. Moreover, since most of the securities

had greatly appreciated in value, Taxpayer

would have had to incur a substantial capital

gains tax to convert them into cash. For

these reasons, Taxpayer’s management viewed

the securities as business investments which

were not available either for use in meeting

Taxpayer's reasonable business needs or for

distribution to its shareholders. However,

even if the cost of Taxpayer’s marketable se-

curities are included in the computation of

Taxpayer's net liquid assets, the cost of one

of Taxpayer's operating cycles for the taxable

year in question was still in excess of its

net liquid assets determined as of the end

of the taxable year.”

is hereby amended to read as follows (changes

italicized ) :

“For a number of years, including the taxable

year in question, Taxpayer has held certain

marketable securities. Substantially all of

these securities, however, were of corporations

engaged in businesses related to that of Tax-

payer. Moreover, since most of the securities

—EE

had greatly appreciated in value, Taxpayer

would have had to incur a substantial capital

gains tax to convert them into cash. For

these reasons, Taxpayer’s management did not

view the securities as a part of Taxpayer's

net liquid assets. Rather, the securities were

viewed as long-term business investments

which were neither available for use in meet-

ing Taxpayer’s reasonable business needs nor

generally available for distribution to its

shareholders. However, even if the cost of

Taxpayer's marketable securities are included

in the computation of Taxpayer's net liquid

assets, the cost of one of Taxpayer's operating

cycles for the taxable year in question was

still in excess of its net liquid assets deter-

mined as of the end of the taxable year.”

(f) PAGE 11, FOURTH PARAGRAPH, which reads:

“Taxpayer has paid the deficiency. This

claim is filed for refund of the deficiency

with interest thereon as provided by law, or

such greater amount as may be legally refund-

able.”

is hereby amended to read as follows (changes

italicized):

“Taxpayer has paid the deficiency with inter-

est thereon. The deficiency was paid within

ten days of the receipt of notice and demand

issued in connection therewith. This claim

is filed for the refund of the deficiency and

interest so paid with interest thereon as pro-

vided by law, or such greater amount as may

be legally refundable.”

(g) PAGE 11, CONTENTION (1), FIRST SEN-

TENCE is hereby amended to read as follows

(changes italicized):

“(1) The marketable securities which Tax-

payer held and which had substantially ap-

preciated in value were neither available for

use in meeting Taxpayer’s reasonable business

needs nor generally available for distribution

to its shareholders.”

(h) PAGE 14, CONTENTION (4), is hereby amended

to read as follows (changes italicized):

“(4) Under any of the alternative conten-

tions stated above, Taxpayer is not subject to

an accumulated earnings tax liability under

Int. Rev. Code §531 for the taxable year in

question. Accordingly, the accumulated earn-

ings tax deficiency and interest thereon as-

sessed against and paid by Taxpayer consti-

tutes an overpayment for which Taxpayer is

entitled to a refund.”

(i) PAGE 14 is hereby amended to add the following

contentions (5), (6) and (7) with respect to the

interest paid by Taxpayer on the accumulated

earnings tax assessed against it:

“(5) The accumulated earnings tax imposed

by Int. Rev. Code $531 is not a “tax” within

the meaning of Int. Rev. Code §6601(a).

Rather, it is either an “assessable penalty,

additional amount or addition to the tax”

within the meaning of Int. Rev. Code §6601

(f) (3). Interest on such a penalty, additional

amount, or addition to the tax can be imposed

only if it is not paid within ten days from the

date of notice and demand. Taxpayer paid

the accumulated earnings tax deficiency as-

sessed against it within ten days of the re-

ceipt of notice and demand. Accordingly,

even if an accumulated earnings tax was prop-

erly assessed against Taxpayer, which Tax-

payer denies, Taxpayer is not liable for any

interest on such tax.”

“(6) Even if the accumulated earnings tax

is a ‘tax’ within the meaning of Int. Rev.

Code §6601(a), which Taxpayer denies, by

virtue of Int. Rev. Code §6155, the ‘last date

prescribed for payment’ of such tax under Int.

Rev. Code §6601(a) is the date of notice and

demand. Interest can therefore be imposed

on an accumulated earnings tax deficiency

only from the date of notice and demand to

the date of payment, unless payment is made

within ten days of notice and demand in

which case Int. Rev. Code §6601 (f) (4) pre-

cludes the imposition of any interest. Tax-

payer paid the accumulated earnings tax as-

sessed against it within ten days of the

receipt of notice and demand. Consequently,

even if an accumulated earnings tax was

properly assessed against Taxpayer, which

Taxpayer denies, Taxpayer is not liable for

any interest on such tax.”

“(7) Under either of the alternative conten-

tions (5) or (6) stated above, Taxpayer is

not liable for any interest on the accumulated

earnings tax assessed against it for the tax-

able year in question. Accordingly, even if

an accumulated earnings tax was properly as-

sessed against Taxpayer, which Taxpayer

denies, the interest assessed against and paid

by Taxpayer with respect to such tax con-

stitutes an overpayment for which Taxpayer

is entitled to a refund.

'Pis. Dir. Georgia | | same

Exhibit C

es ‘| es 4 (thet

e.. { at ; fr i.

‘ 1. OUte Veet at tee bd fei erOor Vem

NENT ORE VAS PRAT 08, TAN PADS

wat 7 ee ee ee er Ce H, evant GAME aan, 9 bee oe vqueel

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| | Bre ferree of Ae vnc Pore! for Sten ges Uae od, of Use ddan Beton on Dacess,

Dhoteoe ated haw Ac cod fret epphoatte te estate, gilt, or mcome taxes).

PASE TYEE © PRINY PLAIY none

ht i vr at

1\ 1 COR \ ; nite

aia oe —— -_-_—-+- er rrr -

Blow bee rad st eet + City, town, Stote, Pestol 2:7 Code

. ® Ay -

’.O. Rox 17)? i Atlanta, Georg) a 30301 my RY Se

galt ninetuaier andy billines chortle icms—/ atch better cio sheets ii spuce is met sutectemt

° : y gue enaiel a quedy ’ vel . ivy tes numbeos, f yount return Lb. Woon employer, enter employer identification number

: 58-0136820

C. Disteeet ons beck tetern (ef ony, wos bed d Nore ond acidress shown on totum, f diferent from chove

ee — a CE

from July L »~WG65.% June _ 30 9 66 Income.

Q Aricent © Cert nt pame ef geys nent $3, 200212/1 5/65 »? $15, “B00. .20: 3/15/66;

$325, 00 $15 1 799, 80: 6/9/0605 $100, 102.50: 9/15/66; $100, 1p? . O33

— —- eee

Yate su sot sore punches “om ‘ he ou-t ‘Le " tunde oe nt moome tos, a me, 2 Shs or

; se net F wi comp! LL mputatheon A 0 i ¥ : $90, 616 - 14: 6/1/70

ve > s 81 ’ 520.80_ i $ a

b he ve le ves thet us ¢) 4 shouts be ‘ol owed for the follow ing fOsONS:

See Attached Stztement

CO. AtUN OF INCOME TAX RCSUND Income Tox

V. Tou withhe’d 0... oc... ENIAC EA RAO EDD rE A AAR

SS a er re rT eee ee eee eee Cee ee a 34 ge -90_ —w

se UE Wes CUI GID goon cc cos eee hee Oe Ree U ONES EDS SES ORES RODEO DEH OED EDs - 300, 204 95 aia

G. Asm Oteiigrl trmpene Gan POND gw nc cc ccc ccc cece reer esessvcssesereseesenesssess "99,616.14.

i es BO, goa none kncdcnsccdocncencessts ics ccm dull ay ade wae 328,621..09.....

6. Less: Your computation of correct 10K... ee eee eee eee eww eee eee eeee | 244, 100-29

eee rr Tr rrr Tre eee ee ee Te Tee eee rT Te ee eee 81,.520.C° *

8. Amount previor by SO eee re ee See eee eT ee ee ee eC) os -0- —-

GS. Net overpoyee # (Fever interes § above) Peer ee eee TT ee PT eC eC LU oe Sf 0+ + sBneseees 81, 520. BO oseee

der pe multe: of perjury, | doclore that this claim, including ary accen-panying schedules ond statements, has been cxomined

by me ond to the ' «tof my knowledge ond belef it is true ond correct.

BIG ons cnce: tewes seddincnennsececsssscang: Wes

SCL WaSIFUCTICNS OF FEVERSE

fORM 843 (ev. 7-65)

7Or such greater airmcunt as may be legally refundabic.

ee ee ee ee ——— ee ee ee — eee eee ee ee - -—-

STATEMENT ATTACHED TO AND FORMING A PART

OF THE CLAIM OF IVAN ALLEN COMPANY FOR RE-

FUND OF INCOME AND ACCUMULATED EARNINGS

TAXES PAID FOR THE TAXABLE YEAR 1966

I. Salary Paid by Taxpayer to Ivan Allen, Sr.

A. Statement of Facts

During the taxable year in question and during all

the years of its existence, Ivan Allen Company (herein-

after referred to as “Taxpayer”), was engaged in the office

supply business.

Taxpayer was founded in 1899 by Mr. Ivan Allen,

Sr. and Mr. J. W. Fielder. At that time, the office supply

business was unique, and Ivan Allen, Sr. may well have

been its originator. He was undoubtedly the first in the

southeast to visualize the idea of a department store of

office equipment.

The business prospered in the early 1900’s, and in

1920, Mr. Allen, Sr. was elected President of Taxpayer.

In 1938 he became Chairman of Taxpayer’s Board of Di-

rectors and served in this position until his death.

During a substantial portion of the period in which

he served Taxpayer as President and Chairman of its

Board of Directors, Mr. Allen, Sr. had the primary responsi-

bility for the management and supervision of Taxpayer’s

business and was undoubtedly the major factor in its suc-

cess and growth. Moreover, Mr. Allen, Sr. was responsi-

ble for a number of innovations in the office supply busi-

ness, all of which contributed to Taxpayer’s success. He

originated an inventory control plan, which for years has

been the most widely used plan in the business. With

minor improvements, both the standard accounting forms

and cost of doing business forms which Mr. Allen, Sr.

developed are still being used. He developed the quintup-

let charge and billing system whereby the invoice, charge,

delivery ticket, statistical record and salesman’s slip are

all made in one operation. Finally, Mr. Allen, Sr. was

the first to capitalize on the use of “visual education”

in the business. Indeed, as early as 1923, he suggested

using films to demonstrate the various manufacturing pro-

cesses and facilities connected with the stationer’s industry.

Mr. Allen, Sr. was not only a successful businessman

but also took an active part in numerous civic activities.

He served as President of the Atlanta Chamber of Com-

merce, as President of the Southeastern Fair Association

and was the first President of the Atlanta Convention

Bureau. He served as a member of a small committee

which raised the first substantial funds for the Atlanta

area Boy Scouts and for many years served on the Execu-

tive Committee of the Council of Boy Scouts. Mr. Allen,

Sr. was one of the original members of the Agriculture

and Industrial Development Board of Georgia. He served

as Chairman of the Forward Atlanta Commission, of the

Fulton County Department of Public Welfare, and of a

Committee which raised funds to reestablish Oglethorpe

University. Finally, Mr. Allen, Sr.’s close relationship with

President Franklin D. Roosevelt led to his appointment

as Chairman of the Federal Home Loan Bank in the south-

east and as Chairman of the Franklin D. Roosevelt Warm

Springs Memorial Commission.

Thus, while Mr. Allen, Sr. was implementing the many

innovations in the office supply business which he had

developed, he was also engaged in various civic activities

which drew attention to and created respect for both Tax-

payer and Mr. Allen, Sr. It was this combination of Mr.

Allen, Sr.’s business acumen and his various civic activities

which led to Taxpayer’s growth into a highly successful

company.

Notwithstanding Mr. Allen, Sr.’s role in Taxpayer’s

success, his salary was always extremely modest. Indeed,

throughout his years of service to Taxpayer, Mr. Allen,

Sr. was paid a salary which was always less than Taxpay-

er’s leading salesman, and frequently less than several

of Taxpayer’s salesmen.

In 1964, Mr. Allen, Sr. suffered a stroke which cur-

tailed his activities with Taxpayer. At that time, he had

served Taxpayer for more than 64 years, always at a

very modest salary. Even after his sickness, however,

Mr. Allen, Sr. continued to serve Taxpayer in a consulting

capacity. In consideration of his services as a consultant

and for the many years of service in which he was the

major factor in Taxpayer’s development, Taxpayer con-

tinued to pay him the very modest annual salary

of $12,525.16.

Taxpayer deducted the amount of the salary which

it paid to Mr. Allen, Sr. as an ordinary and necessary

business expense for its taxable year 1966. The Commis-

sioner determined, however, that the amount paid to Mr.

Allen, Sr. constituted unreasonable compensation and that

the payment should not therefore have been deducted.

Accordingly, the Commissioner assessed a deficiency

against Taxpayer for its taxable year 1966.

Taxpayer has paid the deficiency. This claim is filed

for the refund of the deficiency so paid, with interest

thereon as provided by law, or, such greater amount as

may be legally refundable.

B. Taxpayer’s Contentions

(1) The amount which Taxpayer paid to Mr. Ivan

Allen, Sr. constituted a reasonable salary for both past

and present personal services actually rendered to Tax-

payer within the meaning of Int. Rev. Code §162(a) (1).

The amount. which Taxpayer paid to Mr. Allen, Sr. was,

therefore, an ordinary and necessary business expense

within the meaning of Int. Rev. Code §162(a).

(2) Under the contention stated above, the amount

which Taxpayer paid to Mr. Allen, Sr. was properly de-

ducted by Taxpayer under Int. Rev. Code §162(a). Ac-

cordingly, the deficiency assessed against and paid by Tax-

payer constitutes an overpayment for which Taxpayer is

entitled to a refund.

II. Salary Paid by Taxpayer to Ivan Allen, Jr.

A. Statement of Facts

Ivan Allen, Jr. was employed by Taxpayer in 1933.

In 1938 he became Secretary-Treasurer of Taxpayer. In

1946 he was elected President of Taxpayer and in 1957

became Vice Chairman of Taxpayer’s Board of Directors.

In 1962, Mr. Allen, Jr. was elected Mayor of the City

of Atlanta and served in this capacity during the taxable

year in question. Although his duties as Mayor limited

the time which Mr. Allen, Jr. was able to spend on Tax-

payer’s routine matters, he continued to serve as Tax-

payer’s chief policy maker. For example, Mr. Allen, Jr.

continued to receive daily communications with respect

to the business problems confronting Taxpayer and often

made daily responses. He continued to review all it.ternal

financial reports, including inventory and sales data, and

was in frequent consultation with Taxpayer’s officers with

respect to merchandising lines, sales, personnel matters,

inventory, accounting, and market extension. Mr. Allen,

Jr. continued to determine both Taxpayer’s sales policies

and the character of its advertising and promotional oper

ations. He also continued his primary decision making

role with respect to Taxpayer’s major expenditures, includ-

ing not only capital expenditures but also contributions

to the Ivan Allen Company Foundation and to Taxpayer's

profit sharing plan. In short, Taxpayer made no policy

decision of any significance during the taxable year in

question without first obtaining the advice and approval

of Mr. Allen, Jr.

Even prior to becoming Mayor of Atlanta, Mr. Alien,

Jr., like his father, contributed to Taxpayer's success by

spending at least one-half of his working time engaged

in civic and outside business activities. Nevertheless, Tax-

payer’s success during these years clearly attest to Mr.

Allen, Jr.’s ability to operate Taxpayer while spending

a substantial portion of his time engaged in activities other

than the management and supervision of Taxpayer's af-

fairs.

In 1948, Taxpayer paid Mr. Allen, Jr. a very modest

salary of $12,000. As his responsibility and value to Tax-

payer grew, Mr. Allen, Jr.'s salary was increased to $30,000.

When Mr. Allen, Jr. became Mayor of Atlanta, however,

Taxpayer recognized that the amount of time that he could

spend on its affairs would be curtailed. Accordingly, be-

ginning in 1962 and including the taxable year in question,

Taxpayer reduced Mr. Allen’s salary to $15,025.08.

During the taxable year 1966, Taxpayer paid its pres-

ident, Mr. W. H. Glenn, a salary of $34,000, approximately

double that of Mr. Allen, Jr. In the same year, ten of

Taxpayer’s salesmen received salaries greater than that

of Mr. Allen, Jr.

Taxpayer deducted the amount of the salary which

it paid to Mr. Allen, Jr. as an ordinary and necessary

business expense for its taxable year 1966. The Commis-

sioner determined, however, that the amount paid to Mr.

Allen, Jr. constitdted unreasonable compensation and that

the payment was not therefore deductible. Accordingly,

the Commissioner assessed a deficiency against Taxpayer

for its taxable year 1966.

Taxpayer has paid the deficiency. This claim is filed

for the refund of the deficiency so paid, with interest

thereon as provided by law, or such greater amount as

may be legally refundable.

B. Taxpayer's Contentions

(1) The amount which Taxpayer paid to Mr. Allen,

Jr. constituted a reasonable salary for personal services

actually rendered to Taxpayer within the meaning of Int.

Rev. Code §162(a)(1). The amount which Taxpayer paid

to Mr. Allen, Jr. was, therefore, an ordinary and necessary

business expense within the meaning of Int. Rev. Code

§162 (a).

(2) Under the contention stated above, the amount

which Taxpayer paid to Mr. Allen, Jr. was properly de-

ducted by Taxpayer under Int. Rev. Code §162(a). Ac-

cordingly, the deficiency assessed against and paid by Tax-

payer constitutes an overpayment for which Taxpayer is

entitled to a refund.

III. Accumulated Earnings Tax

A. Statement of Facts

Taxpayer’s shareholders as of June 30, 1966 were as

follows:

No. of Shares

Allen, Beaumont 1120

Allen, Hugh Inman 3019

Allen, Irene Beaumont 2615

Allen, Ivan Sr. 6525

Allen, Ivan Jr. 5158

Allen, Ivan Jr. Trustee U/W Charles M. Marshall 11145

Allen, Ivan III

Allen, Ivan IV

Allen, Louise R.

Allen, Margaret Poer

Ball, Jack T.

Brumbelow, Morris

Carnes, John

Dickerson, Elmer

Estes, Robert S.

Floyd, W. F. Jr.

Glenn, W. H.

Hampton, James F.

Harris, Andrew D.

Harris, Grady W.

Harris, W. D.

Jones, Hayden C. Jr.

Lanier, D. B.

Layton, Estate of Charles R.

Murphy, J. H.

Ownby, O. G.

Ownby, O. G. Trustee for Roger Paul

Ownby, O. G. Trustee for Scott Alan

Patrick, James H.

Pettes, Thompson P.

Richardson, Walter

Snellings, Walter Arnold

Tebow, D. L.

Williams, J.C.

Wilson, S. W.

Winslow, T. E.

Total

2731

179

2442

131

892

346

683

2772

231

577

43506

As an operating company, Taxpayer has a readily

ascertainable operating cycle and a need for sufficient

working capital to operate its business through at least

one such cycle. Since Taxpayer’s net liquid assets deter-

mined as of the end of the taxable year in question which

were available for use in meeting its working capital re-

quirements were less than its needs, Taxpayer retained

a portion of its earnings and profits for the taxable year.

For a number of years, including the taxable year

in question, Taxpayer has held certain marketable secu-

rities. Substantially all of these securities, however, were

of corporations engaged in businesses related to that of

Taxpayer. Moreover, since most of the securities had

greatly appreciated in value, Taxpayer would have had

to incur a substantial capital gains tax to convert them

into cash. For these reasons, Taxpayer’s management

viewed the securities as business investments which were

not available either for use in meeting Taxpayer’s reason-

able business needs or for distribution to its shareholders.

However, even if the cost of Taxpayer’s marketable secu-

rities are included in the computation of Taxpayer’s net

liquid assets, the cost of one of Taxpayer’s operating cycles

for the taxable year in question was still in excess of

its net liquid assets determined as of the end of the

taxable year.

Taxpayer does not have a history of making loans

to its shareholders and possesses a record of regular and

substantial dividends. Moreover, the income tax conse-

quences to Taxpayer’s shareholders have never been con-

sidered in determining its dividend policy.

Taxpayer’s ratio of current assets to current liabilities

for the taxable year in question was extremely small.

Indeed, only a very insignificant amount of Taxpayer’s

earnings and profits has ever been invested in assets other

than assets directly related to the operation of Taxpayer’s

business.

Nevertheless, the Commissioner determined that Tax-

payer had accumulated earnings beyond the reasonable

needs of its busiress and that this accumulation was for

the purpose of avoiding the income tax with respect to

its shareholders. Accordingly, the Commissioner as-

sessed an accumulated earnings tax deficiency against Tax-

payer for its taxable year 1966.

Taxpayer has paid the deficiency. This claim is filed

for the refund of the deficiency with interest thereon as

provided by law, or such greater amount as may be legally

refundable.

B. Taxpayer’s Contentions

(1) The marketable securities which Taxpayer held

and which had substantially appreciated in value were

not available either for use in meeting Taxpayer’s reason-

able business needs or for distribution to its shareholders.

For this reason, the marketable securities are excludable

in computing Taxpayer’s net liquid assets available for

use in its business. The cost of one of Taxpayer’s operat-

ing cycles for the taxable year in question thus exceeded

its net liquid assets available for use in its business de-

termined as of the end of the taxable year. Consequently,

Taxpayer’s earnings and profits for the taxable year in

question which it retained were not in excess of and were

retained by Taxpayer for the reasonable needs of its busi-

ness, including the reasonably anticipated needs of its busi-

ness, within the meaning of Int. Rev. Code §535(c). Ac-

cordingly, in computing its accumulated taxable income

under Int. Rev. Code §535, Taxpayer is entitled to an

accumulated earnings credit in an amount at least equal

to the amount of its retained earnings and profits for

the taxable year in question (or in such lesser amount

of its earning and profits for the taxable year in question

as may be determined to have been retained by Taxpayer

for the reasonable needs of its business, including the

reasonably anticipated needs of its business. )

(2) Even if the marketable securities held by Tax-

payer are includable in computing Taxpayer's net liquid

assets available for use in its business, which Taxpayer

denies, the cost of one of Taxpayer’s operating cycles for

the taxable year in question still exceeded its net liquid

assets determined as of the end of the taxable year. More-

over, if Taxpayer had distributed in its taxable year 1965

an amount equal to its accumulated taxable income for

that year and had utilized its marketable securities to

meet its working capital requirements, as the Commissioner

contends it should have and Taxpayer denies, the cost

of one of Taxpayer’s operating cycles would have exceeded

its net liquid assets determined as of the end of the tax-

able year in question by an even greater amount. Conse-

quently, Taxpayer’s earnings and profits for the taxable

year in question which it retained were not in excess

of and were retained by Taxpayer for the reasonable needs

of its business, including the reasonably anticipated needs

of its business, within the meaning of Int. Rev. Code §535

(c). Accordingly, in computing its accumulated taxable

income under Int. Rev. Code §535, Taxpayer is entitled

to an accumulated earnings credit in an amount at least

equal to the amount of its retained earning asd profits

for the taxable year in question (or in such lesser amount

of its earnings and profits for the taxable year in question

as may be determined to have been retained by Taxpayer

for the reasonable needs of its business, including the

reasonably anticipated needs of its business.)

(3) Even if the earnings and profits which Taxpayer

retained exceeded the reasonable needs of its business,

including the reasonably anticipated needs of its business,

which Taxpayer denies, such excess was not accumuleted

by Taxpayer for the purpose of avoiding the income tax

with respect to its shareholders. Taxpayer was not, there-

fore, formed or availed of for the purpose of avoiding

the income tax with respect to its shareholders or the

shareholders of any other corporation by permitting its

earnings and profits to accumulate instead of being divided

and distributed within the meaning of Int. Rev. Code

$532 (a).

(4) Under any of the alternative contentions stated

above, Taxpayer is not subject to an accumulated earnings

tax liability under Int. Rev. Code §531 for the taxable

year in question. Accordingly, the accumulated earnings

tax deficiency assessed against and paid by Taxpayer con-

stitutes an overpayment for which Taxpayer is entitled

te refund.

Exhibit D

A ——

rorm Ord

f =

a 7 . ¢ =o sa .

seagate: amENDED Cec 23d ror REruND

Cecete: tetths See

Patere tt bew tue one

The onseonel Revenve Seruce will indicate in the Block below the head of clam fled, and LMon, where required

0 Refund of Taxes Werolly, Crroneously, or Excessively Collecied.

a Refund of Amount Paid for Stamps Unused, or Used in Error or Excess.

0) Abatement of Tax Assessed (not applicalile to income, estate or crit taxes).

_— _

mee ee -

rac + teen

(Date recemwed)

~ Please Type or Paint Plainly

—- a es

Neme of taxpayer or purchaser of straps

IVAN ALLEN_COMPANY_

Number and str eet $ City or town, Stute, and ZIP code

P. O. Box 1712 Atlanta, — Georgia

Fill in ep plicable KOMS—Uce attachments if necessary

s. Yor Social security number | Wife's number, «f jor ant return

58-0136820

30301

b b. Employer identification number (if any)

~--—————- —— —_-— —-- —

c. Internal Revenue Service ofi.ce where re- | d. ‘iume and address shown on return, of different from above

turn (if any) was fied

Dist. Dir. Georgia Same

e@. Perod—if for ta tan yeported on annual basis, prepare separate form ¢ tor each tax able. year | t “Kind re tax

July 1 65 June at 9 66; Income

et . -sswosmsaness as ae oye 570$ 4

g. Amount of assessment 3% otrapent 5 367" RENT 576 b T268 99 167803 4 (683 10 >. 4

, 325,621.09 TVET att set a's 2 ba Pemeiel 157885" saint |

h. —— Date stamps were purchased from Govern. i “Amount to be refunded (if mcome tax, | ». Amount to be abated (not applica! 's to income, es-

ment cormpiete computation below) tate, or gift taxcs)

$ 81,520.80* $ ie

k. The claimart Deleves thet se m should Be etowed for the follow: rcatons.

See Attached Statement

BEST COPY AVAILABLE

COMPUTATION OF INCOME TAX RCFUND

1 Tax withheld

2 Estimated tax paid.

3 Tax paid with original return .

4 Any additional income tax paid .

5 Total tax paid (add tines 1-4) .

6 Less: Your computation of cor.cct tax.

7 Amount of overpay:rent .

8 Amount previously refunded .

Income Tax

ae 34, 800. 00. a

200, : 20.95.

| —Sss« 90, , 616.14

bs 325,621. 09

| 244,100.29

81,520.80*

9 Net overpayment (enter in item i above) .

Under penalties of pequry. | declare that | have examined Uns claun, including accompanying schedules and statements,

and to the best of my knowledye and belef it 1 true, correct, and Compicte.

I iinicdiandiensicsaiacaamtuaniealibaniona

Dated =

Cc (wie 7a vecttens on pe ve wa

iiew Too

e ‘ ‘ ture R4:

plu, : aT, 2605 uarel Interest, w it: 4 Dhaka 2c Cintheoon, as provided by sav’ or

sstneshy cnt at SVMGSEEED KE atss BNA bees Pease te restuncable.

STATEMENT AMENDING IVAN ALLEN COMPANY’S

CLAIM FOR REFUND OF INCOME AND ACCUMU-

LATED EARNINGS TAXES PAID FOR THE TAXABLE

YEAR 7/1/65-6/ 30/66

On October 19, 1970, Ivan Allen Company (herein-

after referred to as “‘taxpayer’’) filed a Claim For Refund

(“Claim”) of income and accumulated earning taxes paid

for its taxable year 1966. This statement is filed to amend

Taxpayer’s previously filed Claim as follows:

(1) The Form 843 previously filed by Taxpayer is

hereby amended in accordance with the Form 843 attached

hereto and styled “Amended Claim for Refund.”

(2) The “STATEMENT ATTACHED TO AND

FORMING A PART OF THE CLAIM OF IVAN ALLEN

COMPANY FOR REFUND OF INCOME AND ACCUMU-

LATED EARNINGS TAXES PAID FOR THE TAXABLE

YEAR 1966” is hereby amended as follows:

(a) PAGE 4, SECOND FULL PARAGRAPH, which

reads:

“Taxpayer has paid the deficiency. This

claim is filed for refund of the deficiency

so paid, with interest thereon as provided by

law, or such greater amount as may be legally

refundable.”

is hereby amended to read as follows (changes

italicized):

“Taxpayer has paid the deficiency with inter-

est thereon. This claim is filed for the re-

fund of the deficiency and interest so paid,

with interest thereon as provided by law, or

such greater amount as may be legally refund-

able.”

(b) PAGE 4, CONTENTION (2) is hereby amended

to read as follows (changes italicized):

“(2) Under the contention stated above, the

amount which Taxpayer paid to Mr. Allen,

Sr. was properly deducted by Taxpayer under

Int. Rev. Code §162(a). Accordingly, the de-

ficiency and interest thereon assessed against

and paid by Taxpayer constitutes an overpay-

ment for which Taxpayer is entitled to a re-

fund.”

“Taxpayer has paid the deficiency. This

claim is filed for the refund of the deficiency

so paid, with interest thereon as provided by

law, or such greater amount as may be legally

refundable.”

is hereby amended to read as follows (changes

italicized) :

“Taxpayer has paid the deficiency with inter-

est thereon. This claim is filed for the refund

of the deficiency and interest so paid, with

interest thereon as provided by law, or such

greater amount as may be legally refundable.”

(d) PAGE 8, CONTENTION (2) is hereby amended

to read as follows (changes italicized) :

“(2) Under the contention stated above, the

amount which Taxpayer paid to Mr. Allen,

Jr. was properly deducted by Taxpayer under

Int. Rev. Code §162(a). Accordingly, the defi-

ciency and interest thereon assessed against

and paid by Taxpayer constitutes an overpay-

ment for which Taxpayer is entitled to a re-

fund.

(e) PAGE 10, SECOND PARAGRAPH, which reads:

“For a number of years, including the taxable

year in question, Taxpayer has held certain

marketable securities. Substantially all of

these securities, however, were of corporations

engaged in businesses related to that of Tax-

payer. Moreover, since most of the securities

had greatly appreciated in value, Taxpayer

would have had to incur a substantial capital

gains tax to convert them into cash. For

these reasons, Taxpayer’s management viewed

the securities as business investments which

were not available either for use in meeting

Taxpayer’s reasonable business needs or for

distribution to its shareholders. However,

even if the cost of Taxpayer’s marketable se-

curities are included in the computation of

Taxpayer’s net liquid assets, the cost of one

of Taxpayer’s operating cycles for the taxable

year in question was still in excess of its

view the securities as a purt of Taxpayer’s

net liquid assets. Rathe™. the securities were

viewed as long-term business investments

which were neither available for use in meet-

ing Taxpayer’s reasonable business needs nor

generally available for distribution to its

shareholders. However, even if the cost of

Taxpayer’s marketable securities are included

in the computation of Taxpayer’s net liquid

assets, the cost of one of Taxpayer’s operating

cycles for the taxable year in question was

still in excess of its net liquid assets deter

mined as of the end of the taxable year.”

(f) PAGE 11, FOURTH PARAGRAPH, which reads:

“Taxpayer has paid the deficiency. This

claim is filed for refund of the deficiency

with interest thereon as provided by law, or

such greater amount as may be ‘egally refund-

able.”

net liquid assets dete-mined as of the end is hereby amended to read as follows (changes

of the taxable year.” italicized) :

is hereby amended to read as follows (changes “Taxpayer has paid the deficiency with inter-

italicized): est thereon. The deficiency was paid within

ten days of the receipt of notice and demand

issued in connection therewith. This claim

is filed for the refund of the deficiency and

interest so paid with interest thereon as pro-

i t t

engaged in businesses related to that of Tax- aan wy ae, OF ened —S—

: we be legally refundable.

payer. Moreover, since most of the securities

had greatly appreciated in value, Taxpayer (g) PAGE 11, CONTENTION (1), FIRST SEN-

would have had to incur a substantial capital TENCE is hereby amended to read as follows

gains tax to convert them into cash. For (changes italicized) :

these reasons, Taxpayer’s management did not

“For a number of years, including the taxable

year in question, Taxpayer has held certain

marketable securities. Substantially all of

these securities, however, were of corporations

“(1) The marketable securities which Tax-

payer held and which had substantially ap-

preciated in value were neither available for

use in meeting Taxpayer’s reasonable business

needs nor generally available for distribution

to its shareholders.”

(h) PAGE 14, CONTENTION (4), is hereby amended

to read as follows (changes italicized) :

“(4) Under any of the alternative conten-

tions stated above, Taxpayer is not subject to

an accumulated earnings tax liability under

Int. Rev. Code §531 for the taxable year in

question. Accordingly, the accumulated earn-

ings tax deficiency and interest thereon

assessed against and paid by Taxpayer con-

stitutes an overpayment for which Taxpayer

is entitled to a refund.”

(i) PAGE 14 is hereby amended to add the following

contentions (5), (6) and (7) with respect to the

interest paid by Taxpayer on the accumulated

earrings tax assessed against it:

“(5) The accumulated earnings tax imposed

by Int. Rev. Code §531 is not a ‘tax’ within

the meaning of Int. Rev. Code §6601(a).

Rather, it is either an ‘assessable penalty,

additional amount or addition to the tax’

within the meaning of Int. Rev. Code §6601

(f)(3). Interest on such a penalty, addi-

tional amount, or addition to the tax can be

imposed only if it is not paid within ten days

from the date of notice and demand. Tax-

payer paid the accumulated earnings tax de-

ficiency assessed against it within ten days of

the receipt of notice and demand. Accord-

ingly, even if an accumulated earnings tax

was properly assessed against Taxpayer,

which Taxpayer denies, Taxpayer is not li-

able for any interest on such tax.”

“(6) Even if the accumulated earnings tax

is a ‘tax’ within the meaning of Int. Rev.

Code §6601(a), which Taxpayer denies, by

virtue of Int. Rev. Code §6155, the ‘last date

prescribed for payment’ of such tax under

Int. Rev. Code §6601(a) is the date of notice

and demand. Interest can therefore be im-

posed on an accumulated earnings tax defi-

ciency only from the date of notice and de-

mand to the date of payment, unless payment

is made within ten days of notice and demand

in which case Int. Rev. Code §6601(f) (4) pre-

cludes the imposition of any interest. Tax-

payer paid the accumulated earnings tax

assessed against it within ten days of the

receipt of notice and demand. Consequently,

even if an accumulated earnings tax was

properly assessed against Taxpayer, which

Taxpayer denies, Taxpayer is not liable for

any interest on such tax.”

“(7) Under either of the alternative conten-

tions (5) or (6) stated above, Taxpayer is

not liable for any interest on the accumulated

earnings tax assessed against it for the tax-

able year in question. Accordingly, even if

an accumulated earnings tax was properly as-

sessed against Taxpayer, which Taxpayer de-

nies, the interest assessed against and paid

by Taxpayer with respect to such tax con-

stitutes an overpayment for which Taxpayer

is entitled to a refund.

IN THE

UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

(Title Omitted in Printing )

ANSWER

(Filed July 15, 1971)

The defendant, United States of America, by and

through its attorney, for answer to the plaintiff's com-

plaint herein, admits, denies and alleges as follows:

Admits the allegations contained in paragraph 1, ex-

cept denies that the internal revenue taxes sought to be

recovered herein were erroneously and illegally assessed

against and collected from the plaintiff.

Admits the allegations contained in paragraph 2.

Admits the allegations contained in paragraph 3, ex-

cept denies that the taxes referred to therein were er-

roneously and illegally assessed against and collected from

the taxpayer.

Admits the allegations contained in paragraph 4.

With respect to the allegations contained in paragraph

5, the defendant answers as follows:

Denies the allegations contained in the first sentence

and alleges that upon audit of the taxpayer’s returns for

the taxable years in question, the Secretary of the Treasury

or his delegate determined that the alleged salaries which

the taxpayer paid Mr. Ivan Alien, Sr., and Mr. Ivan Allen,

Jr., were not ordinary and necessary business expenses

of the taxpayer.

Admits the allegations contained in the second sen-

tence.

Denies the allegations contained in paragraph 6, ex-

cept admits that the Secretary of the Treasury or his

delegate assessed against the taxpayer, for the years re-

ferred to, additional income and accumulated earnings

taxes, together with interest thereon, in at least the

amounts set out in paragraph 6.

Admits the allegations contained in paragraph 7.

Admits the allegations contained in paragraph 8, ex-

cept denies that no decision has been rendered on the

said claims for refund, as amended, by the Secretary of

the Treasury or his delegate.

Admits the allegations contained in paragraph 9, ex-

cept denies each and every allegation of fact and each

and every contention set out in the claims for refund

and amendments referred to in paragraph 9 unless other-

wise specifically admitted herein.

10.

Denies the allegations contained in paragraph 10.

11.

Admits the allegations contained in paragraph 11, ex-

cept denies that the taxes and interest referred to therein

were erroneously and illegally assessed against and col-

lected from the taxpayer.

12.

Denies the allegations contained in paragraph 12.

13.

Admits the allegations contained in paragraph 13, ex-

cept denies that the additional income and accumulated

earnings taxes and the interest thereon sought to be re-

covered herein were erroneously and illegally assessed

against and collected from the taxpayer.

14.

Admits the allegations contained in paragraph 14.

WHEREFORE, the defendant prays for judgment in

its favor, for dismissal of the plaintiff's complaint with

prejudice, for costs and for such other and further relief

as justice may require.

The defendant requests a trial by jury.

John W. Stokes, Jr.

United States Attorney

By: /s/ Stanley M. Baum

Assistant United States Attorney

(Certificate Omitted in Printing)

IN THE

UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

(Title Omitted in Printing)

STIPULATION

(Filed June 12, 1972)

The parties hereto through their respective counsel

stipulate and agree as follows:

1. This is a civil action instituted by Ivan Allen Com-

pany (hereinafter referred to as the “taxpayer”) against

the United States (hereinafter referred to as the Govern-

ment) for the recovery of $212,132.53 in federal income

and accumulated earnings taxes, including interest thereon,

paid for the fiscal years ended June 30, 1965 and June

30, 1966.

2. Both factual and legal issues are presented by

the case. One of the legal issues (set out hereinbelow

in paragraph 15) is such that its resolution may be disposi-

tive of the taxpayer’s claim for the refund of the accumu-

lated earnings taxes involved. Therefore, such issue is

hereby submitted to the Court for decision. Pending the

Court’s decision thereof, the remaining issues in the case

may, subject to the discretion of the Court, be held in

abeyance.

3. The taxpayer is a Georgia corporation engaged

in the business of selling office furniture, equipment and

such other supplies as are used in offices and places of

business.

4. For its fiscal years ended June 30, 1965 and June

30, 1966, the taxpayer filed its federal income tax returns

with, and paid the tax shown as due thereon to, the Dis-

trict Director of Internal Revenue, Atlanta, Georgia. True

copies of said returns are attached hereto as Exhibits A

and B, respectively.

5. Following an examination of the taxpayer’s fed-

eral income tax returns for the fiscal years ended June

30, 1965 and June 30, 1966, the Commissioner of Internal

Revenue determined, among other things, that the tax-

payer had permitted its undistributed earnings and profits

for each of such years to accumulate beyond the reasonable

and reasonably anticipated needs of its business and that

one of the purposes of the accumulation for each such year

was avoiding income tax with respect to its shareholders.

Based upon such determination, $77,383.98 and $73,131.87

in accumulated earnings taxes, together with interest there-

on, were assessed against and collected from the taxpayer

for its fiscal years ended June 30, 1965, and June 30, 1966,

respectively. Thereafter, and within the time provided by

law, the taxpayer duly filed claims for refund of such ac-

cumulated earnings tax and interest. When the claims for

refund were not allowed, the taxpayer instituted the in-

stant action alleging that such accumulated earnings taxes

and interest were erroneously and illegally assessed

against and collected from it.

6. At the close of its fiscal years ended June 30, 1965

and June 30, 1966, the taxpayer owned listed and unlisted

marketable securities the cost and fair market values

(FMV) of which were as follows:

FYE FYE

6-30-65 6-30-66

Cost FMV Cost FMV

40 shs. Arlington

Development Corp.

common stock

(unlisted) $ 1,000 $ 1,000 $ 1,000 $ 1,000

300 shs. C. & S. Capital

Corp. common stock

(listed) 1,650 788 1,650 825

- $600 Commerce and

Jackson County

Development Corp.

bond (unlisted) 600 600

149 shs. Minnesota

Mining & Mfg. Co.

common stock (listed) 3,046 8,605

165 shs. Southern

Airways common

stock (listed) 600 1,650

11,140 shs. Xerox

Corp. common stock

(listed) 116,701 1,573,525

10,090 shs. Xerox ~

Corp. common

stock (listed) 102,479 2,479,617

$30,600.00 Xerox

Corp. convertible

debentures (listed) 30,625 48,424 30,625 69,768

$154,222 $1,634,592 $135,754 $2,551,210

7. The cost of converting the taxpayer’s marketable

securities into cash would have been the sum of . maximum

of 6% of the fair market value of such securities (payable

as a brokerage commission) and a maximum of 25% of

such amount of the fair market value as exceeds the sum

of the brokerage commission and the cost of the securities

(payable as capital gains taxes).

8. For its fiscal year ended June 30, 1965, the tax-

payer paid dividends to its stockholders as follows:

Cash $48,945.30

870 shs. Xerox Corp. common stock (at cost) 6,564.34

9. For its fiscal year ended June 30, 1966, the tax-

payer paid dividends to its stockholders as follows:

Cash $50,267.49

10% stock dividend of Ivan Allen Company

10. In determining whether the accumulated earnings

taxes involved herein were erroneously and illegally as-

sessed against and collected from the taxpayer, it is nec-

essary to determine whether the taxpayer’s undistributed

“earnings and profits [were] permitted to accumulate be-

yond the reasonable [and reasonably anticipated] needs

of the business,” within the meaning of Section 533(a) of

the Internal Revenue Code of 1954.

11. For the purposes of determining whether the tax-

payer permitted its earnings and profits “to accumulate be-

yond the reasonable [and reasonably anticipated] needs

of the business,” within the meaning of Section 533(a)

of the Internal Revenue Code of 1954, the parties agree

that the taxpayer had reasonable business needs for operat-

ing capital equal to $1,198,309.00 and $1,455,222.00 at the

close of its fiscal years ended June 30, 1965 and June 30,

1966, respectively.

12. The amounts of net liquid assets (current assets

less current liabilities) owned by the taxpayer at the close

of its fiscal years ended June 30, 1965 and June 30, 1966,

were $1,198,309.00 and $1,455,222.00, respectively, if its

marketable securities are taken into account at cost, and

$2,235,029.00 and $3,152,009.00, respectively, if its market-

able securities are taken into account at their fair market

value less the cost of converting them into cash.

13. If, in determining the amount of the taxpayer's

net liquid assets at the close of each of the suit years, for

purposes of determining the applicability of Section 533 (a)

of the Internal Revenue Code of 1954, the taxpayer’s mar-

ketable securities should properly be taken into account at

cost, the taxpayer’s undistributed earnings and profits were

not permitted to accumulate beyond the reasonable and

reasonably anticipated needs of the taxpayer’s business.

14. If, in determining the amount of the taxpayer’s

net liquid assets at the close of each of the suit years, for

purposes of determining the applicability of Section 533 (a)

of the Internal Revenue Code of 1954, the taxpayer’s mar-

ketable securities should properly be taken into account

at their fair market value (less the cost of converting

them into cash), the taxpayer’s undistributed earnings and

profits for each of such years were permitted to accumulate

beyond the reasonable and reasonably anticipated needs

of the taxpayer’s business.

15. Thus, the following legal question is presented for

resolution by the Court:

Whether, in determining the amount of the tax-

payer’s net liquid assets at the close of each of the

suit years, for purposes of determining the applicabil-

ity of Section 533(a) of the Internal Revenue Code

of 1954, the taxpayer’s marketable securities should

properly be taken into account at their cost, as the

taxpayer contends, or at their fair market value (less

the cost of converting them into cash), as the Gov-

ernment contends.

16. In the event it is determined that the taxpayer

permitted its undistributed earnings and profits to ac-

cumulate beyond the reasonable and reasonably anticipated

needs of its business, a further factual issue relating to the

58 Exhibit A

accumulated earnings tax involved in the case remains te.

be resolved, i.e. whether one of the purposes of such ac- en 4 | UG. on BATT Oe TAN RE l— 1004 552471 5795)

cumulations was avoiding income tax with respect to the Oh merge Mo yiat | __ ether tate a eomnen nnUL Seasse rin ea batt tT UBO BC 0S ik aves

taxpayer’s shareholders. In the further proceeding, if JB bate pret 9 Or aa913522¢ 1563 to 52 5 $801 aie

any, to resolve said remaining factual issue, either party AY, Rend oh correraren, Siti | [Reeves

ru fF 6. County in which i. oa! -d.

B. Conse! ed return. O : aaa Ful ton

may, subject to pertinent objections, offer any evidence yy ” ee G; Ener total te from ice

° \e P » . ‘ instructi rs) 13 Sch. L (see 1:..tr ction F)

therein which is not inconsistent with the matters stipu- we! $2.717.825.19

: =90, ee aa >

lated herein. IMPORTANT—All applicable lines and schedules must be filled in. If the lines on the schedul»s cre net sufficient, see instruction O.

4. Gross receipts or Gross sales .....---2-cc-ceeceeeeeee----+--- Less: Returns and allowances .........----+-.-reeee=- $501 s2520..2... a

: . 31 2. Less: Cost of goods scld (Schedule A) andor operations (attach schedule).........--+sseeeeeenees 1 0 «mata Heda l te 2 Se Sic

June 12, 1972 /s/ Kirk McAlpin Bi ee ana wht Otte oentee ' i Paste GERSTNER 2,990,008. 15...

Date Counsel for Plaintiff © | 4. Dividends (Schedule O).......csceeseeeeseeeeees pedgnidliebencuenscossevevonesoetoeeesscosncsdheensed 99129363...

; e) §. Interest on obligations of the United States and U.S. instrumentalities........ceeceereeeeer ee neee eee: Loreenennnsnssnnsnns aecseesrorne

June 12, 1972 /s/ Jack D. Warren - ee) rrr rrr TT TTT rrrrTrTiTiTiTiTiririrrirrriririrrer et 13,5 35 76

Date Counsel for Defen d ant 3 Z nt OE RT RR ET EE eT Ere TT TT TTT TTT TTT itil etek eo 159,325. 7. 6.

64) 9. Net gains ‘lorses) from separate Schedule D....... oN Henay eR Sen SE en Ey ern emo ere wa & 17 O4

o 40. Other income (attach schedule). ........cccccccceeeeeeceeeeeeeeeeeeeeecnensnestesees Meewinee 176,267. ul

il. pe EL errr rrr rrr errr rr rrrrrrrrerrrrrrrrrr rr: 2, 400,458 255

48. Compensation of ollicers (Schedule E)............cscseeeceserceseceeeseseneeecensesenescesenee ses [eanses 4293507229

13. Salaries and wages (not deducted elsewhere)... 6... cece eee cece eee e eee eee eneeerere de ovnes a ane 731. 33. 5

14. Repairs (do no! include cost of improvements or capital expenditures)... ...... 66... eee e eee Jee cence: [ennnnnnenens 8,255. 20...

18. Bad debts (fre Schedule F if reserve method is used)... 0... cece cece eee renee eee wene nent eee tt lenwenenad 1 1498.3 19

89. Taxes (attcch schedule)........ccccccccccccccccccccecsccseseseeeeseeescseseeseeeseeeeseeeasesss fawenwns 10 7402.33.

BB. Bnteredd. .... cc cccccccccccccccvcceccvcscecccccesceesscseeseeeesseceeeeseeeseeeesseeseesesssses siecesncs .20;6 30.94.

¥ 19. Contricutions or gilts paid (attach schedule—see instructions for limitat.on). ©... 6... ceceeereeeeeeeees eeseeee QELS... .

Q | 20. Losses by fire, storm, shipwreck, or other casualty, or theft (attcch ener mei

ts 23. Amortization lattach schedule)... ..... cece cceccccccccvcccceccccvecseceeesseseessesseseeres ttt s[ecererocegspoonsennssnnzaonens

BB. Deoreciation (Schedule G)....ccccccsccccccvvccveccccrcccccccecescereseesserereseeeeesesesesees sfeaesernes ° 4 395s 22 aiea

B 83. Depletion (attach schedulle).......+.s-sssesseereeressersereserscecascnecseaseusansuscaecerss ses becnsuetnn seine see

2) BE. Advertising 2.0... ccc ccccccescccccccccccceecescncereenseeseees eeeeseeeeeerseeseereeeeseereres no RRR Re ike

@ | 2S. (2) Pension, profit-sharing. stock bonus, ann'z'y Lh ty nt DOOD. o.oo iste cccnnceascececed Fouts )y900 «00

(b) Other employee benelit plans *? “nstreetions) . a -p SS ry ee a cae to le tl al aces rb ESOS Seat See

26. Other deductions (attach schedul@ : } iar ina neeanneveerees a geeeeeeeceeccccescssscseeens 244 113.95

27. TOTAL deductions in lines 82 615$.1656......... GES en eRe 22009 013.2%

28. Taxable income before net cperating | ie: setae 5 we SoeT deductions (line }1 less line 27)... ~~ We) PiLekes: sa

29. Less: (s) Net opercting lors rer n (see ingtpsc ery Cam acn schedule)

abe

(b) Speci! deductions (Schedule ater - mse |_ 50.399 .0% 50,399.52

| 30. Taxchle ircome ‘line 22 te +s ne 29). aa 341,05°.52

31. TOTAL incowe tan (from line 19, Schedule J)... ....cscccecescrcccsces gest seeees cess Pe 100, 335 _ -

$2. Credits: (a) Tax paid with Ferm 7004 application for extersicn (attach copy)... 80,000.00

H (b) Payments ond credits on 1964 declaraticn of estincted tax . ny } 45,020.90 . fre See ee

12 (c) Credi® from regulated inv<:t-ent commernies fettach Pers 243% a eet ——— 100 ,OF0.00__

Es 33. lf tax (line 31) is larger thon credits (line 32), the balonce ie TAX DUE. Enter belar ce here > rhe Rte

34. If tax Cire 31) is less than c:edits (line 32).......... . Enter th> OVERPAYMENT here >| we

26. Ester amount of line 34 you want: Credited on. 1965 es.niaied tex = ...« Refunded .

Undis Pens shes oS: per, ary. I ceciare taat | have excr..ce? this tetucn, inmc’uding occenm.cen;,.ng schecu. e383 Gnd sictement:, and tc

ie kei ct my etuwledte ord celef it is true. correct. ard complete. Ut grepored wy: + ten ether then‘: rxpever, iis oslave nis based

ca c!! informer. ct which he hes cny srow'e niqe.

, “= 4

ee ob, j. - , ‘y a . gf. 7 (ue

| tae Es” a ee FL ASS Becseapues: ay decile ;

om r*"Bare Signeture ct si..-* Tite

. CE ED Pud..* AT oCUNTNUTS

ar’ "endian concecnsnenenenspersangsensees -0.+ coc seeee seenenace« ness eeeeneees eee “EIS LD TT Ts > naa che ae

- — = —<-aUoe----——s < —

}

BEST COPY AVAILABLE

Foran 1120 1954)

- a, OR

Schedule A.—CCS7T OF GOODS SOL See instruction 2) | 1. Was inventory val at-—-Coct ower of coet or market Eh

tt A >

(Where investone are an a0 * + fsotor LIFO ©; ether O us other, attach explanation.

oe... a ae nner enema =| 3. Have writedowns tren made to inveatory? Yes €) No O. ff

: e:* 22397 “yo “ah p ienens aumadie he kasi

1. Inventory at beginniny of year 5405931.01 ait Penn thegna Nec ae pane Eye basis of

PP At LEI OF AP ALN > 3K 679 (97 < bed geroense feauchons irom p 3 cf te unventory

3. Merchandise tought for menufa orsale | vow Sep dpeecs (b) Oy Porsontage reduction: from the tetal aventory

3. Salaries and wases sends we Necy 1.81 ou Mpa ve ‘te r- lon ge tor th ' ‘

oe : $ Checked, enter the percentage of write-

4. Other costs per books (a ach schedule) 23,43 w Q...& or “9.” “bh” . tar the ds!

pe —- Se do ns =a ~=%@. A Oo SR) of, "Center the dollar

enous — downs $.. = +> taSs. (If not available

GE A7 Re 06 : estimate Gnd incicate that the figure is an estimate.)

PEE s.cvecnecoudecdesaqueceeteseens ree) amt diters-] 3, Wes the inventory veriied by physical count during the year?

Yes © No ©. ItNo” attach explanation of how the closing in-

- entory w stermine

6. Les. Inventory at end of year $09,215.25! « W Be ne ps — al oh h 4

. « Inventory f y2 OY Se. - Was there any substantial change in the manner cf determining

7. Cost cf goods sold (enter here and on line 2. | . Quantities costs or valuations botw een the opening end elesing in

(Nie ere insti ae te pa Se 1 can em a ventories? Yes (1) No (3. It “Yes, attach explanation.

| Ms» 10 ® ~~ ea! NOTE I 9 direct answer connect be given to a Question attach erclanatoes,

Schedu.e C.—INCOME FROM DIVIDENDS

2. Domestic corporstons | 3 Corte * preferred stock

ate of Pedic wtites tasadie

1, Name of declaring corporat on ph LY ~ a wader chapter |. internal | © FOC? corporations | $. Other corporations

ene Cose

—_

eueeccccccossece

Ms ov avy choenisnatccadeseionavesesanel ‘

CPE HOHE HHH HL nu reroweerooseosoooos

Total (enter here and on line 4. page 1) Schedule

' 59,293 53

le D.—Separate Schedule D Form 1120 should be used in reporting sales or exchanges of property. (See instruction $)

Schedule E.—COMPENSATION OF OFFICERS (See page 5 of instructions)

3. Time de- | Percent of corporation

1. Name and adress of officer 2. Oficial titie voted to | stock anes 6 Amount of 7. Eapeace account

. business | F Eommon § Preteved compersaiict Hlowsves

hein iathdiadiniciadiadabtincuiaihianeadeandaahidaainiaiecseauauad ; + de | REE OT im seed

MMR a ES sae

Total compensation of officers (enter here erd on line 12. page 1) a }

Schedule F.—BAD DEBTS—RISERVE METHOD See instruction 15)

‘ae i Geusbte outstondrag siondecl yest 3. Sales an account & Griss {reas $ eee agarnst 6 Reserve tor os debts at eng

om 2 —- [ - ie — — oa ——

ETN TMM - sencituomniaies

BID fewvene eoccesescesesusecensesesll eennsedetenecentesecacesensnees eseelin os «s-seesiegeemens-enneneinicsenmdiieeimnlenasenelseienennenssnniannnnnnnnnnnnnnnnInIEnannnn

ERS, ia HOS suvindatinbistoasenmabaaaa

1964 .|..... siiesiasitalabltaina ; : sacteces ssqveliedtadanibiaiibiiden sienna

"NOTE. Securities which are captal arsets ard which hecame worthless within the tacable year should be fepered mescaraeScedeD

Schedule G.—DEPRECIATION (See instruction 22)

This schedule is dengred for texpayers usirg the clternative gu.delires and admiristeauve procedures described in Revenue Procedure

ane " e base as - -re ‘ } 5

6: ~21 as well as for those taxpayers who vish to continue using procedures authoritd prior ta the Reverue Procedure. Where double

headings appear use the first heading for the new procedure ard the second heading for the elder procedure.

cs aL EL Ry ieee mi peat ante A .

| 2. Cost or other tosis 3. Asset addons

1. Group ard i. deline clas at Des rmng of: vor in yet atocet ‘ bp ppt $. Depreciation € Memos ly Cop ite

endtaa Desert Sen — | aon = 1 ae ok ghee EEO 24 to | Mew OF 2M IDIe | comeing | Rate i=) . ae

" Ps ° ets -) t or we eee va A 4 - }

is acq. red Res. Proc. 62-21) ® prot pears Geprec ation | ore

8. Total additional first yeer depreciation (do not include in items below) > 2,009.00

shiestnendcniadsdinentanbanéeniel onal pa ers.) eovioaiaidad

Epes” aa ==

|r sseces-eeeeen enna] ons-seseseeeeeneeesafeesenenenenees a nel ceedecsoutiiiigsinaasaaaaannaiiaiae

; EPEAT IT: TRIE Rar. | ‘Serie Ee

00-8 Oned 11€@ | | | | 21 370 RO

= Seer lester ere vee eceseseeeece itt te en es} 2

. a Ee - ° - . ay

PEED ss 0seusanexcucoaauees £.5¢ r Ss Seabees 50 0.0.0.00060608060-0615i605 eu naliineinanennnnennnnnnnnn

3. Less: Amount of depreciation claim=d in Sched:te A and elsewhere on return. ............ leckcn eae ‘ 139,5¢'.58

4. Balance— Enter here end en line 22, page ! a Scan puntesepecueesnas she ..| 64,395, 22

$. Cost or other basis of filly depreciated aciets st! in ue | |

25 16— Te iss t

U.S. TREASURY DEPARTMENT —INTERNAL REVENUE SFRVICE

rom 103+) | APPLICATION F°? AUTOUATIS EXTENSION OF THIF 70 FILE U.S. Co2PORATION

Rov. Fed. 1599 INCGE TA. RETURN (SEC. GO31(b), INTERTAL .cVENUE CODE OF 1854)

| (See Instructions on roverse sido) |

For taxable year beginn.ng ......... duly 1, 2 en mes 194 and ending ‘impisenl koe . 19.65

PLEASE TYPE OR PRINT PLAINLY

e of cor poraLon

Serial No.

IVAN ALLEN COMPANY

ond street

U an exiers.cn of time is

necessary, file this form with

the District Director of In-

ternal Revense on or belore

the 15th day of the third

month following the close of

the texable year.

BOX 1712

City oF town, posta: sone numoer,

ATLANTA, GEORGIA 30301

Application is hereby made for an automatic extension of three months for filing the completed return of the corporation named herein in

accordance with the provisions of section 608! (b) of the Internal Revenue Code of 1954.

Or hatte

A remittance of an amount not less than would be required as the first insta!lment of the tax tentatively determined to be due for the

texab’e year shown above cccompanies this application.

1. Tentative amount of tax for the taxable year... 6... e cee cee eens Gene aVE ey

2. Less: Payments mace on decicration of estumated tax sinned ¥edeseedeesenes Monel 46 2020.00

i ss eimeees ACT OD '

4. Amount of remitiance. ....... ........

SIGNATURE AND VERIFICATION

I declare under the pena!ties of perjury that | have been authorized by the above-named corporation to make this application and thc.

to the best of my know.edye and belief the statements mace herein are true and correct.

I declare under the pens!'.es of perjury that | am currently enrolled to practice before the Trea. ry Department and have been authorized

by the chove named corperat.cn to make this application; and that to the best of my knowledge and beliei the statements made herein are

true and ccrrect

err ee reer te ferer rs «OO Oe Oe Oe ees ee eee eRe rene eee e es ereresen) Seereresesesoee

(Address) ; (Name of tiem, if any)

A COPY OF THIS APPLICATION MUST BE FILED WITH THE TAXPAYER'S COMPLETED RETURN

as SCHECULE D US. Treasury Department - internat Revenue Service j

(Form 1120) GAINS AMD LOSSES FRO.i SALES OR EXCHANGES OF PROPERTY 1964

Name and address

IVAN ALLEN COMPAITY - ATLANTA, GEDRGIA

PART d; _—GAIN FROM DISPOSITION OF lenny ey PROPERTY UNDER SECTIONS 1245 AND 1250—Assets Held More

Months—Where double appear, use the first heading for section 1245 and the second heading for section 1250,

; @ Cost of other Dass, cost of

8. Kind of property (if necessary. attach statement of © Date acquired ¢ Date sold 4 Gross sates price subsequent improvements (it

Gexcriptive detais mot snuwn Delow, (wo, day. yt) (me., day, yt.) Mot purchased attach expia-

nation) and expense of sale

Ca ne a Rn ES eT RN = > i

£. Depreciation allowed (oF allowabdie) since acquisition }

(attach scheduie. H | b Oday

Januar December owdeon ation 1-2) ay =. .._ ery

ew Oe. Se nj. 412 | (see instructions)

Prior to Jarwary 1, 1964 After Decem er 31, 196)

| STEEN ee womens | ee Bases Caras

teen en me ee | ee Rae eeeaeres | > . Ps

2. Total ordinary gain. Enter here and on line !1 and identify as gain from PartI ...... =

3. Total other gain. Enter here and on line 4 and identify as gain from Part I ae

PART II].—SALE OR EXCHANGE OF PROPERTY UNDER SECTION 231

| | Depreciation atiowes! Cast cv omer basis, |

& Kind of property (it _ attach statement |b Date acqui Date eid 5 1% owed’ cost of subsequent im-

Gi descrip ve Geta's not shown below | (eo. don yt) | <io., doy, we) | 4. Gross sates price | * quan Eaascamsneiia i pus ote

AEE TT, HI om en nena x Min SSE

SEI EAE Pearce nsenennctnalincarareceoenionivaioonnainn pe |

§. Total (If gain. enter on line 9: if loss enter on line 11. Identify os gain or loves from Part tL).

PART III.—CAPITAL ASSETS

Short-Term Copital Gains and Losses—Assets Held Not More Than 6 Months - ae

eS scnichichaaiiaeieaial LE: OTN. i TSR) ACOA Ge Oa

2. Unused ensiel on carryover > tattech statement) A Ra te epee tae | ns

8. Total of short term capital gains or .csses or difterence between short-term. can:tal gains and losses

ae "ue Copitel Gairs and Uosees— avis Hel More Then a REET Re AOS

® ..100.sh. Ivan Allen... EU | RFS

..0A....0f Augusts.... 4958. 8-216) Re emirates BK ~ | -ba00500.. nk 2065 00

- 20. sh...Ivan.Allen... a . a

a »..0f. Rome... sf 6230-635 =20-65 (A 1,367.80. 14379276. ef A796)

SN LE EE! Rhee aia

10. ‘Total of lonc term ec capi east on tins of losses or dit. rer.ce betweer, long-term catital gains and losses 1,657.04

IV.—PROPERTY OTHER THAN CAPITAL ASSETS

> os ‘ ‘ at .

12. Tetol net oain for los) Enter here and or line 15 patie anaes

vo raas7-1

Scinedule D (Form 1120) 1964 — aa Page 2

PA. /.—TOTAL SCHEDULE D GAINS AND LC _ Ss

13. Enter the excess of net short-term capital gain (line 8) over net long-term capital loss (line 10)............- Pisalllicadtsciditiatiaatiamlides

14. Enter the excess of net long-term capital gain (line 10) over net short term capital loss (line 8}............... nee bg 657208

18. Net gain (loss) from property cther than captal assets (line | 2).

16. Total lines 13, 14 and 15, enter here and on Form 1120 page-!. line 9.

Alternative Tax Computation

(Component members of controlled corporate group use Form 3920 to compute your tax)

17. Tazable income (line 30, page |. Form 1!20)........

ee ee ee

18. Net long-term capital gain reduced by any net short-term capital loss (lime 14)... .. 20.6.2 .ceceecee ee eee] 1,657.04

ih nin... <7) siesdinaamns » cba eendssbsaebedeauonsdstsdinambaamenne

20. If amount of line 19 is:

Oe nee SE Re nee ee a ae aT Ta

22. Alternative tax (line 20 plus line 21).

the margin to the right of the entry

eee eee eee eee eee ee ee

If applicable, enter on line 3, Schedule |, Form 117%, and write “alt.” in

088200

Losses from sales or exchanges of capital assets shall be allowed

quiytoteo cutest ch quinatoam euch enine on enshangns However

the amount of a net capital loss sustained in any tasable year may

be carried oa to each of the five succeeding taxable years (or

less 1s attr.butable to a tcreign expropriation loss

the ten succeeding taxable years). A net capita! loss

sha!l be treated in each such succeeding taxable year as a

short-term capital loss > the — not —— as a deduction

against any net carital gains of ary taza year intervening

between the toxable year in which the net capital loss was sus

tained and the taxable year to which carried.

Definition of assets.—The term “capital assets”

means property held by the taxpayer (whether or not connected

with its trade or business) but does not include (1) stock in trade

of the taxpayer cr cther property of a kand which would properly

be included in the inventory of the taxpayer if on hard at the

close of the tazable year, or property held by the taxpayer

primarily for sale to customers in the ordinary course of its trade

or business; or (2) property used in the trade or busiress ot a

character which is subject to the allowance for depreciction

in section 167, or real property used in the trade or

of the taxpayer; or (3) certain copyrichts, literary,

pa OF artistic compositions, or simular properties; or (4)

accounts or notes receivable acquired in the ordinary course of

trade or business for services rendered or from the sale of property

described in (i) above; or (5) an obligation ot the United States

or any of its possessions. or of 3 Stute, or any pelitical subdivision

thereof, or of the District of Columbia, issued on or atter March 1,

1941, on a discount basis and payable without interest at a fixed

maturity date not exceeding | year from the date of issue.

Basis. —In determining gain or less for property acquired after

February 28, 1913. use cost, except where property was seguires | 4 sale or exchange, direct!y or indirectly. of property between an

. gift, tax-free exchange. involuntary conversion, or wash

sale stock, see sections 1014, 1015, 1031. 1033. and 1091. re |

> it che amount shown as the basis is other than actual |

cost of the property sc!d or exchanged. tul! details must be

furnished regarding the acquisition of the property.

Losses on securities bec worthless. —!{ any securities

becor.e worthless within the taxable year and are capital assets

the loss resulting theretrem shall.

than a bank, as defined in section 531, be considerea as @ loss

from the sale or ex->ange. on the last day cf zuch taaatle year,

of capital assets ction 165(g)(1).

Losses rot allowable. No loss is recug

Stock or securities. Sect.on 1091

No loss is allow ved lencegt distributions in |.7u.dst.on) between

4d persons. Sest.on 267.

nized for wash sales cf

(Instructions continued on severse of duplicate)

in the case of a texcuyer other |

electrical energy gas, water, or sewage disposal services, or used

asa research or storage facility in connection with these activities;

and (c) elevators or escalators.

as provided below section 1250 means de-

precicble real property (cther than section 1245 property).

See sections 1245(b) and 1250(d) for and limita-

tions invol ? (a) disposition by gift, (b) certain tax. tree trans-

actions; (c) like ind exchanges, involuntary conversions; and (d)

sales or exchanges to cies and exchanges to

comply with S.E.C. orders.

Column f of Part I.—In computing depreciation allowed or

rllowaple tor clevators or escalators enter in column {1 deprecia-

tion prior to July 1, 1963, and im column {2 depreciation after

June 30, 1963.

Column i of Part I, section 1250 property only.—!! held for

more than 6 months. but not more than | year, enter the smaller of

a column h, or

(2) column f-2.

It held for more than | year, enter the result of multiplying the

smailer of

(1) column h. or

(2) column {-2 less the amount of depreciation competed for

the same period using the straight line method.

by the percer.tage ottained by subtrecting trom 100°%. one per-

centage po:nt for each tull month the property was heid 4 In excess

ot 20 months. Where substantial improvements have been

made within the preceding ten years. see section | 250(f).

Gain on sales by a “‘controlled"’ corporation. —In the case of

individual and a corveration more than 80 percent in value of the

outstand:rg stock ot which 13s owned by such individual. his spouse.

and his minor children and :..nor grandchildren. any gain recog

mized to the transferor from such sale or exchanze shall be treated

@s gain trom the sale or exchange of property which is neither a

capital asset nor property described in section 1231, if such prop-

erty in the hands of the transieree is depreciabl onder section

167. Section 1239.

Installment sales.-—-!f you sold personal property for more than

$1.000 of rea! property regadless ct amount. you may be eligible

to repert any ga:n u ince: the installment plan if (1) there 1s no pay:

ment in the year of scle cr (2) the payments in the year of sale do

not exceed 3JD~. of = seiling price. Section 453

For treatment cf a pertion of payments as “unstated interest’

| on deterred payment sales, see Section 483

16 Teaer-s

Scnucule D Form 1120) 1965 Page 2

Pe... V.—TOCTAL SCHEDULE D GAINS AND LOWES

13. Enter the excess of net short-term esp.tcl gain (ine 8) over net long-term capital loss (line 10)............... IVAN ALLEN COMPANY - ATiaANTA, GEORGIA

14, Erter the excess of net long-term cap.tel Gain (line 10) over net short-term capital loss (line 8) 1,657. ou

18. Net cain Giezs) from property other then capital assets Dine 12).........c cece cececececeees CSET. “Rare Year ended June 70, 1965

16. Tete) lines 13. 14. and 15. Enter here and on Form 1220, page 1. line 9... ... 2... eee eee eee e ee: 1,057.04

Alternative Tax Computation Ser SSSswSr Sse str SSSS ST SSSS IPS SS SVS UNAS PSS SST BAS SSHSS TTS St HSS SSSSSSEVsSSsSseseras=rs

(Component members of controlled corporate group use Form 3320 to compute your tax) pons Printing

341,045.52

12. Taxable income (ine 30, page 1, Form 1120)..... 0... 0... ecw cece wee eees eT a CF OL” SS SESS SS SES SSS SS SHS HS SSS STS SSS SSS SSS SSS MS SST SS SS t iSSSe “=ses

18. Net long-term cap.tci gain reduced oy any net short-term capital leas Gin 14). .oooseessseeossness eee: me RAT SO Seventery - materiale, June 30, 196+ $ 3,97%.10 $ 68,702.95

i SONNE GEE... cccmnenspendsevetonsncosedte me PB ok Purchases - materials 1,499.35 523,110.08

20. If amount of line 19 is: | Freight P 84

5 75,00: 2 aS 59 Boop

COST OF GOODS MATUFATTURE>

ee ee eee eee ee ee

EE ee ee en

(b) Over $25,003—Enier 46 percent of line 19........ shenaiaitiniainidceiiinieattaaitatattsadil 162,906.61 = Less inventory - materials, Cune 20, 19465 5,498.10 65,155.96

Subtract $4500 and enter difference. . Controlled. -.5,000.00...... - 157,906.61 MATERIALS USED OR EPEE 520, ER G

21. 25 percent of line 18...... pnamewe eegntecncacesens sueseses eneeeséeeeeceesse jendennateneses ebenneese 414.26 Direct labor ‘

22. Alternative tax Cine 20 plus line 21). I applicable, emeante’ Schedule J, om 1220, and write “alt.” in

Manufacturing expenses:

the marain to the rth of the entry :, stile = RAE a ere 158,320.87 | Labor - indirect

INSTRUCSTICLIS Payroll taxes

(Refezeaces exe to the Internal Revenue Code) Rent - building

- equ n

Gains and !osies from sales or exchances of capital cssets | Gains from section 1245 or 1250 property held more than 6 qQuipment

and others pzeperty.— Report sales or excr.anges of capial @ssets | months (Part I).—(Report any gain from such property Heat » power and water

end sales s exchanges cs property Other than capital cssets in | held for 6 months or less in Part IV.) Except as provided Deprec tation €quipmen:

Schedule D. Every sale or excrazge of property, even though no | below section 1245 property means depreciable (a) persona! prop- ?

gain or loss may be indicated, must oe reported in detail. erty aver pm) pemenene ey untangi cle ee aed Insurance

non Lasset (bd) tangiole rec prope: ty (except for duildings and their structu -

oot sales w cxshongna sl enptal exets chal by alowed | TESTIS: dustd coat coneeal panel sanciosbonay, pontor Taxes, general

the amount 0: a net cap.tal joss susta.ned wn an taxaole year may 808. Or extraction, or of jurnishing wansportation, communications, Maintenance - *quipmnt

be carne 3 over to each of the ive succeei.ng taagele years (or electrical energy. Gas, water. or sewage disposal serv. 228, OF &

to the exten: such loss is @t:sDutacie to @ io: reign eaproprianon lots | 98 @ Tesearch of storage facility in connection with these actuwities;

3,557.68" 16,632.35

Supplies - depar*menta- 6,287.5 3,584.34

to each of the ten succeeding taxabie years). A net capital loss | @n (6) evevators or escalators. - litho - 5,211.06

shall be ee in eGch Such sucsued.c.3 tazacle year as a Except as Proviced below section 1250 Prt yaw means Ce- - letterpress a 2,271.62

short-term ¢ap.ta! loss to the extent not c.lowed as @ deduction | Pfeci@b.e feat propesty (other than section 1245 property). shee > 608.4 5,498.01

Qgs.nst any het cap. a) gains of any tauable year intervening Sce sections 1245(b) and 1250(d) for exceptions and limita- = COmpos.%t.on «OU. 23 ’ .

between the taxcb.e year in which the net capital less was sus- tions involving: (a) c.spes uon by Gut; (o) certain tax tree trans- - cutting machin= 76.87 456.19

teined ond the tcxch.e year to waich carried. @ct.cns, (c) lise sind eachanges. involuntary Conversions; and (d)

Defin.tion of ecpitel essets.—The term “cop.tc] assets”

Mesns property heis by the taxpayer ‘whether or not connected

with its trade or Susiness) Dut cows: Rot inc.uce (3 ) sice ck in trace

3 the taxpayer oF Other property ¢ 8 @ bing which would propery

M the inversery oS the toxpsyer d on hand at tie

dae ci the tcask:- yecr, or property heid by the taxpaye:

Pre 3s..." .C2 53.2 ° Customers in the ordinery course of its trace

“

Gr S...:..58; OF |. Property used in the trace or Business, cf

Sata w..ck 2 sudject to the Giowance for cepreciat.on

ercv.ded it. ..at OF Tesi property used in the trac

Business © » % COpYT-GAts,

Gusicai, Or Grtisiic OF properies; or (4) |

ecco! ts OF Be oS FEC VAS.

3 ix. the cranary course of

trode oF Susr<5s for services tencere 3 or from th 2 52.6 Ci procerty

Gescrided .n (.) Gicve; or (5) oa obugatica ct ine United States

ae me = Sen -

GP G3 SG SiSte, Cr S + 4 Fou t 162; prere re

wd on Or aiter -isrch 1.

3 @R3 Peyacie witnout interest ct o ized

motu. ‘y G3ie yoy €xcevang | year izom tie date of issue.

SGle c: stocs. See ser i634, 1015, i031, 1033, and iC2\, re.

spectively. ithe ams ..: shown as the des. is other than cciual

ecsh cot ci the Pier oy ccid or eachor.gud. iui. details must be

furnished regarcis. 3 the coguisition ef the property.

Loss2s or. . curitics becomiag worthless.--!i any securities

become wo- 223 Wi... the taxecie yesr and cre capital assets

the 655%. «5g thereirom shail, in the caze of ¢ taxpayer ciher

thenc .. +, os Geiinea in section 551, be considered as @ 1os3

See: *... . ww OF F @KS. SAGA, 03 the isei Gay C2 suca toxacle year,

@i esz.ic. c.ets. Section iés siti).

Los:es not allowable .—-No less is recognized for wash sales of

Seiated gessons. Seci.on 267.

sales or exchanges to eifectuate FCC pol.cies and exchanges to

compiy wata SEC orders.

Coiurnn f of Part I.—In computing deprec:ation allowed or

| Gucwasw ior. lovaters of escalators enter im cowumn i-] deprecia-

ton prior to hy i, 1963, and in column {-2 depreciation axer

June 30, 196

Columa i of Part I, section 1250 property only.—li held for

ve ‘aan © months. Dut not more than | year, enter the smailer of

(1) eciuma h, st

(2) COlLLR.A t-2

tt hela tor more than | year, enter the result of muit.piying the

SMAucr Ci

«) cO.ur.n h. or

(2) column i-2 tess the amoun: of cepreciation computed fcr

the same pericd using the s! —— git line moped

by the percentage oi!a Aes by suctr trom iCOS3, one per.

ceniage pot tor each wil month the j pre; erty was f. weld iM excess

| of 20 mex Where subdsitentic] improvements heve been

Mace with.n the preced.ng ten years. se= section i 250i).

Gain on sales by e “controlled” onpmation << nthe case ci

@ 62.2 OF exchange, directly or incirect.,. 2: property Between oa

i7.civicua} ard ¢ cor Sion mere thes, $0 rcent in vsiue of the

Outstanding siock of which 1s owned by sch .7 yn his spouse,

Ono fis mor ch.ldren and miner Grances... nY Gin reccg-

tiged to the transieror from such sa.e or exc: 3h 5e snail be treated

es gain from the sale or exchange of prerer y which is ne:ther @

caz.:c] asset nor property desenbed in sec:. on 1331. if such prop-

erty in the haris of tne transferee is depreciable uncer section

i672. Secon i239.

Installment sale 5.—*. “ou 50 ‘d personal property for more then

$1,000 o res! property :- 5 ardiec 2 of amount, ry May w e.ug.ble

® om ry ONY Gain Ur ger tee instaiiuent pian u (1) there is no pay-

mt in the yer of sale, or (2) the payments in the year ot sale do

ce cr secucues. Seenon 1091. j ont exceed 3073 cf the selung pr.ce. Section 453.

6 locs .5 allowed (cacect distribut.ons in heuidaties) between |

For treatment of a portion of payments as “unstated intere:t”

| on deferred payment scles, see secuon 483.

(Instructions continued on reverse of duplicate)

COM REPRODUCED BY FPHOTOSRAPHIC PRO Les BY COMMERCE CLEARING MOK INC... CHICAGO. MEW YORK, WASHINGTON.

- bindery “5”

- plate making

- collator

- rotary press

- camers

Outside services

Other

TOTAL MANUFACTURING EXIENSE

TOTAL COST OF GOODS }

= 917.68

To ere £) 7,732.01

. 1,930.71

- 940.48

- 2.9370.40

2,207.33 23,741.80

. 2,057.90 1,800.97

S 22.529.0" $ 202,045.00

252.59..77 $1,085,195 6

66 67

TAX SCHEDULE - 58-0136820

IVAN ALLEN COMPANY - ATLANTA, GSORGIA IVAN ALLEN COMPANY - ATLANTA, GEORGIA

Year ended June 30, 1965

DIVIDENDS .

OTHER DEDUCTIONS

ry: $ 5,950.25 Travel and entertainment $ 54,895.25

3 M Company 193-71 Telephone and telegraph 334932. 67

Ivan Allen Company of Huntsville 2,400.00 Postage 18,116.77

Ivan Allen Company of Augusta 4,000.00 Dues and subscriptions: 19,438.35

Ivan Allen Company of Athens, Tenn. 4,000.00 Sales promotion 4,968.15

Southern Airways ° 33-00 Stationery and supplies 45,950.23

Ivan Allen Company of Gainesville 5,850.00 Heat, power and water 16,973.23

Ivan Allen Company of Columbus 1,500.00 rach 21,165.60

Ivan Allen Company of Rome 14,700.00 leaseholds 3,267.00

Ivan Allen Company of Macon 11,666.67 rene g aaa 23,581.98

Ivan Allen Company of Greenville 9,000.00 Bnployees welfare 3,922.68

MA . Administrative charges to subsidiaries (56,100.00)

$52,293.63 Legal and professional aa

id Credits and collections o Wee

OTHER INCOME Bank charges 685.42

Discount earned $ 77,074.94 Contract services 12,778.30

Sales tax compensation 214.52 Directors fees 1,700.00

Profit on special sales 6,557.19 Rent commissions 2,875.08

Purchase charges to subsidiaries 92,440.76 Pensions 2,808.

Miscellaneous 20,822.82

COMPENSATION OF OFFICERS

Ivan E. Allen, Chairman

$ 12,525.10 §$ 900.42 len Com or Albeny, Ga. 96.00%

> eee 31,025.00 1,919.89 en aiken roe awed of potty Ga. 100.00

He C. Jones, Exec. Vice-President 27,524.92 2,039.95 Ivan Allen Co. of Athens, Tenn. 66.67

W. F. Floyd, Jr., Sec. -Treas. 21,224.92 706.47 Ivan Allen Co. of Augusta, Ga. 66.67

Je H. Carnes, Vice-President 22,159. 32 706. 30 Ivan Allen Co. of Chattanooga, Tenn. 100.00

a a create Ceodunctient 2b 824.92 860.57 Ivan Allen Co. of Columbus, Ga. 66.67

o> & Warp, Vicostvesisent 17,021.92 3,423.05 Ivan Allen Co. of Gainesville, Ga. 90.00

P Ivan Allen Co. of Greenville, S. C. 60.00

g 238 Ivan Ailen Co. of Huntsville, Ala. 100.00

Ivan Allen Co. of Macon, Ga. 66.67

Ivan Allen Co. of Rome, Ga. 96.7

$176,287.42

Compensation Expenses

Year ended June 30, 1965

QUESTION I (1) FEDERAL RETURN

TAX SCHEDULE - 58-0136820

IVAN ALLEN COMPANY - ATLANTA, GHORGIA

Year ended June 30, 1965

TAXES

City, state and county

Intangibles

Domestic corporation

Corporation registration

Business licenses

Automobile and truck

Pay roll

Less taxes charged to cost of sales

GEORGIA

Georgia income tax - current years

- prior years

CONTRIBUTIONS

Atlanta Humane Society

Georgia Cumberland Conference

Exchange Club

Oglethorpe Boosters Club

Marion Howard School

Junior League

Florence Crittenton School

Bopty Stocking Fund

Buckhead Lions Club

North Fulton Fine Arts Foundation

Christian City

Salvation Army

Allen Foundation:

Cash

100 shares Xerox Corporation = cost 2-24-61 $641.98,

fair warket value 1-29-65

Less contributions carryover - federal

CONTRIBUTIONS + FEDERAL

B328

13,854.32

$17,683.57

2,676.50 20,360.07

$103,402. 33

FEBSES

oO .

S8S88s8ssEsess8

BSR2

TAX SCHEDULE - 58-0136820

IVAN ALLEN COMPANY = ATLANTA, GEORGIA

Year ended June 30, 1965

BALANCE SHEETS

Other investments:

Marketable securities

Investments in subsidiaries

Other assets:

Cash value of life insurance

Prepaid expenses

Leasehold improvements - net

Other current liabilities:

Income taxes

Other taxes

Accrued salaries and weges

Accrued interest

Accrued profit sharing pension contribution

6-30-64 6-30-65

$161,428.56 $154,222.25

_ 318,525.55 351,141.38

$479,954.11 $505 , 363.62

$162,645.52 $176,864.5¢

39,695.35 28,811.61

23,096.13 19,829.13

$180,752.36 $151,521.21

76,274.09 89,819.47

10,037.53 16,557.5

432.67 4146.6

59,257.06 59,786.7

$326,753.72 $318 099.89

mame eee AS Som ress Taser yess

STATEMENT OF RETAINED EARNLAGS

- soot mer Seams tee _—s acm. arene

Saoeacseeaesseseasessessesesessestese Sa ce ses ease estes ss HS SSS SSS Sh S95 SSS SESS SS SSNS SS SSS HBSS Ss SSS SSS ses

Retained earnings, June 30, 1954 $1,997,242.28

Adc:

- + s - = * ‘

Not income for the year ended June 30, 1965 $232,584.98

Excess of fair market value over cost

100 shares Xerox Corp. stccx donated *%

“7 Sol . = ’

Allen Founéation:

Fair merket value 1-29-65 10,800.00

Cost 41.98 10,158.02

Reverue Agent's adjustments for F.Y.E.

@30-63 and 6-20-64:

Capitalization of essets previousiy

chargeé to expense $43,696.12

Reduction in ellcewedle depreciation 685.56

Reversal of sccerusl of contridution to

Alien Foundation not timely paid 7,500.00 §5:,681.70 2904 624.70

ior years’ incoze taxes:

Federal $33,496.07

Georgia 2.676.509 $ 26,272.57

Divicends pais:

Cash $45,955.30

870 shares Xerox Co. stock - st cost 6,564.24 $5,509.64 $1,662.21

RETAINED EARNINGS - JUNE 30, 1965 $2,200,184.77

BEST COPY AVAILABLE

STATEMENT OF PROPERTY PLANT AND EQUIPYENT

\ a - os

bVahec nes? ‘. 4a? ¢.0.%' *,

. , Taaae

~ - -

LL ale “— - Pr re

IVAN ALLEN COMPANY - ATLANTA, GEORGIA

SFiS

. S i. -/ 7 4

Year ended June 30, 1965 emake el reeled pone ® a, SPs

, ;

SSSSsessSsessseseseeseseeseseeoessersseesse sere ssesseseseserecrcsrssssessescseeescc ee eee se —= SSS SSeSesesee FS (SS SESS SS SSS SSS SS SSS SS SS SSS SH SSS Se SSS SSS SSeS SSS SSS SSS SSS ee et esses eee ese:

a Assets Allowance for depreciation Cost less

Balance Balance ~~ Balance Balance depreciation

Jun. 30,1964 Additions Disposals Jun.30,1965 Jun.30,1964 Provision Deduction Jun.30,1965 Jun. 30,1965

Rental property:

Land .

972 Marietta St. $ 35,250.00 $ - §$ - $ 35,250.00 - ¢$ ° $ a $ - $ 35,250.00

221 Ivy St. 74 ,000.00(C) 76,000.00 ° 150,000.00 . 7 a . 150,000.00

660 Forrest Road 72,000.00 - - 72,000.00 - - ~ ° 72,000.00

Buildings:

972 Mariette St.:

1948 - 3% 81,997.69 - - 81,997.69 39,768.85 2,459.93 - 42,228.78 39,768.91

Improvements:

Sprinkler - 1948 - 54% 9,937.00 - 9,937.00 7,436.16 496.85 7,933.01 2,003.99

Roof - 1955 - 104% 4,097.84 ~ 4,097.84 3,892.91 204.93 4,097.84 *

1740 Peachtree St.: ;

1959 - 5% - (A) 183,078.48 - - 183,078.48 44,957.41 6,906.05 - 51,863.46 131,215.02

Improvements - 1959 ~ (A):

Elevator - 10% 15,500.00 - 15,500.00 6,805.02 869.50 7,674.52 7,825.48

Blacktop - 13.3% 6,900.00 - 6,900.00 3,747.42 419.29 4,166.71 2,733.29

Electrical - 13.3% 31,000.00 - - 31,000.00 16,831.40 1,884.42 18,715.82 12,284.18

Plumbing, heating and

air-conditioning - 13.3% 63,000.00 - 63,000.00 34,105. 73 3,842.94 37,948.67 25,051.33

Carpets, etc. = 20% 9,000.00 - 9,000.00 6,345.79 530.84 - 6,876.63 2,123.37

221 Ivy St.:

1960 - 44 177,012.25(C) (76,000.0C) - 101,012.25 24,781.72 4,040.49(C) 6,300.84 22,521.37 78,490.88

1963 addition - 44 428,754.03(C) 16,011.11 - Uhh , 765.14 25,725.24 17,790.61(c) (1,189.02) 44, 704.87 400,060.27

1963 roof - 54% - (c) 8,156.00 8,156.00 - 407.80(c) (407. 80) 815.60 7,340.40

1963 waterproofing and

sign 20% - (c) 9,190.54 e 9,190.54 ° 1,838.10(c) (2,103.67) 3,941.77 5,248.77

660 Forrest Road: ,

1964 - 5% - (A) 121,058.94(C) 3,500.00 124,558.94 6,227.95 6,227.95 118 , 330

$1, 432,586.23 $36,057.05 $ = $1,400,453.00 . .

Furniture and fixtures:

Store - 1961-2 254 (a) $ 2u9.2h ¢$ - $ - $ 249.24 124.12 $ 31.28 - $ 155.40 $ 93.84

= 1962-3 25% (A) 161.41 - - 161.41 55.49 26.48 - 81.97 79.44

Plant - 1958 204% (A) 3,562.74 ° - 3,562.74 2,722.18 168.11 - 2,890.29 672.45

Office - 1956 20% (A) 4,736.12 . - 4,736.12 4,020.98 143.03 - 4,164.01 572.11

- 1957 20% (A) 388.88 : aw 388.88 314.82 14.81 - 329.63 59.25

- 1959 20% (A) 10,746.29 - 7955-50 2,790.79 8,210.92 131.57 6,078.00 2,264.49 526.30

- 1961 20% (A) 3,675.00 - - 3,675.00 1,981.56 338.69 - 2,320.25 1,254.75

~ 1962 254 (A) 1,673.01 . - 1,673.01 833.13 209.97 - 1,043.10 629.91

- 1964 254 (A) 3,960.00 - - 3,960.00 495.00 866.25 - 1,361.25 2,598.75

- 1965 254 (B ° 7,439.50 . 7,439.50 : - 083.06 ‘

$29,152.69 $ 7,43 69

STATEMENT OF PORPERTY PLANT AND EQIUPMENT = CONTINJED

IVAN ALLEN COMPANY = ATLANTA, GEORGIA

Year ended June 30, 1965

soecsssesesesesee see seeseeees

FR RI melanie aa ee eee ctor TaTGE desrecinerone

un. Yor t 1sposga.s °

Lo cemererecencecnensniel neta rans nenenensitanen eee NS _ Seatteten saponins senass 30,1965 Jun. 30,1965

Automobiles and trucks: ee

M1961 Falcon - 66 2/36 (A) 606.78 606.78

1961 Falcon - 66 2/3% (A $1 78 3 - $ - 8 4 ° 1,472.88

1962 Chevrolet - 66 2/3% (A) 3,471.22 2 ° 3,471.22 . 2/699 .8l $ aa mp >= @ 1,562.13 $ uh.

1964 Oldsmobile - 33 1/3% 3,114.68 - - 3,114.68 1,048.22 1,028.22 - a *

1964 Chevrolet - 33 1/34 2,999.11 - - 2,999.11 498.18 999.70 : ie ae 1,038.24

1964 Cadillac 5,706.21 - 5,706.21 - 951.03 . 991.03 , 497. 1,501.23

= Ford Mustang ‘ 3,281.24 aa - 3,281.24 in - 546.82 " 5k6.82 . -

1965 Cadillac - 33 1/3 - 581.09 - 581.09 = . ae -

- -Y* department: « , ee 2,193.70 . 2,193.70 4,387.39

1960 G.M.C. truck = 50% (A 3,783.11 ° - 3,783.11 3,605.77 88.67

1962 Ford van 1,695.30 - 1, 695.30 ° i’554.0 . 3,694. bl 88.67

1963 o/34 (A) stake - , . 9598-08 1,554.03 S -

66 2/3% (A 1,917.35 - ° 1,917-35 1,065.19 568.20 .

oP aaa 5 fag ew = Bgeatie 1,938.23 1,938.23 = HERS, 95883

e van - - «10 - ° a ° , .

——— department: 5 a ‘ , : , 654.03 654.03 1,308.07

1962 Chevrolet panel - 66 2/3% (A) 2,230.61 - - 2,230.61 1,735.41 10 =

— Cheveeies S.W. rea 2,330.31 ° 2,330.31 : we 27136.13 330: asst 2,065.51 165.10

1 Chevrolet S.W. - 33 1/3 2,457.03 - - . 4 B49. e

mers delivery: : : , rated 9.02 1,258.48 1,198.55

1962 Ford van 66 2/3% (A) 1,476.20 - - 1,476.20 1,353.19 82.00 °

1962 Ford van 66 2/3% (A) 1,433. 1 ° - 1,433.31 1,313.87 79.50 - ae 3.98

1962 Chevrolet stake - 66 2/3% (A) 1,772.89 - - 1,772.89 1,379.30 262.25 o 1,601.55 1 1. 4

1962 Corvan 2,253.05 - 2,253.05 - 2,065. 31 8065.3 _— 31-3

1962 Chevrolet panel - 66 2/3% (A) 2,062.21 - 2,062.21 - 1,604.39 a 1,604.39 x a

1962 Chevrolet panel - 66 2/3% (A) 1,682.1 e -_ 1,682.13 1,308. 248.85 e 1,557.55 124.58

1963 Ford van - 66 2/3% (A) 2,012.38 - - 2,012.38 1,565.63 298.00 " 1863.63 118.75

1965 Chevrolet panel - 33 1/3% - 2,358.31 - 2,358.31 e 373.05 - 373.05 ae ae

192 Chevrolet panel - 33 1/3% ° ay ores - ny = 361.50 2 gp ie

965 Chevrolet panel - 33 1/3 - 1,836.3 - ° = 306.06 oa f ?

nage yn ee ; : a 306.06 1,530.28

1965 Ford - 33 1/3% - 1,392.00 - 1 : - 2.00 - 232.

$US.) HO, 353.52 Se eS 22

BEST COPY AVAILABLE

STATEMENT OF PROPERTY PLANT AND EQUIPMENT - CONTINJED

IVAN ALLEN COMPANY = ATLANTA, GEORGIA

Year ended June 30, 1965

rs peeeessencescessessseessssseses sss ses Ss SS SSsss ss seSses SSS Sess sssssse

Assets Allowance for depreciation Cost less

Balance Balance "Balance “Balance depreciation

Jun. 30,1964 Additions Disposais Jun. 30,1965 Jun. 30,1964 Provision Disposals Jun.30,1965 Jun. 30,1965

fechinery and equipment:

- Printing plent:

6 1/44:

1946 3 295.00 $ - $ 295.00 $ - $ 285.82 $ 9.18 $ 295.00 $ - $ -

| 1947 11,899.60 - - 11,899.60 11,699.60 - - 11,699.60 200.00

1947 29 ,000.00 e ° 29,000.00 28 ,500.00 - - 28,500.00 500.00

1949 T 200200 - 7,200.00 - 7,038.00 162.00 7,200.00 - -

1950 455.00 e - 455.00 412.38 28.44 - 440.82 14.18

alin 12,875.20 - - 12,875.20 10,863.45 804.70 - 11,668.15 1,207.05

A):

1954 42,135.00 7 - 42,135.00 37,836.99 859.60 ° 38,696.59 3,438.41

1957 3,858.00 o o 3,858.00 3,129.82 145.6% - 3,275.46 582.54

1958 26,527.99 - - 26,527.99 20,269.24 1,251.75 - 21,520.99 5,007.00

1961 10,225.00 - - 10,225.00 4,335.40 1,177.92 - 5,513.32 4,711.6

1963 35,550.18(C) 6,838.47 - 42,388.65 8,756.79 6,343.42(C)(1,914.77) 17,014.98 25,373.67

1964 38, 414.50 e 38,414.50 5,641.45 6,554.61 - 12,196.06 26,218. 4%

1965 - (B) - 9,012.50 - 9,012.50 - 1,362.14 - 1,362.14 7,650. 36

Quick-copy department:

20% - (A): \

1956 2,687.18 e « 2,687.18 2,179.99 101.44 - 2,281.43 405.75

1956 3,173.42 ° - 3,173.42 2,694.24 95.83 - 2,790.07 383.35

1957 1,372.00 - - 1,372.00 1,113.04 51.79 - 1,164.83 207.17

1958 2,856.74 ° - 2,856. 74 2,182.74 134.80 - b 539.20

F205, 126.61 $15,090.91 & 1,495.00 $ 253,400.10 .

Declining balance method

Additional first year depreciation taken

R.A.R. adjustments

$1, 761,833.10 $78,501.64 32,778.82 $1 807,555.92

116.

BEST COPY AVAILABLE

85.614.8

Feen 1120 1% 4)

Pose 3

~ “Schedule 1.—SPECIAL

DEDUCTIONS

_Gmall! business investment companics and member. of affiliated groups not filing a consolidated return—see instructions)

4. Dividends-received: (a) 85 percent of column 2, Schedule Co... 6. c cece cecceceeeuce seeeaed

(b) 61.2 percent of column 3, Schedule C (ree instructions for trecal year) ..

2. Total dividends-received de tuctions (sur of lines ! Se | (b), and (>) but rot to exceea 39 percent of the excess of line

aeeeeeet linutaton does not appiy to a year in which a net

28, page | over line 4 of this scheaule). (The

SS, ctdcccccdessasacnnesawesuens

3. Dividends paid on certain preferred stock of public utilities ons instruct.ons in case ut net operaiing loss or fiscal year)

4. Western Hem. phere trade corporations (not allowable in year of net operating loss—see inst. for fiscal year). ....

Enter here and on line 29'b), page |

$. Total special deductions— Add lines 2. 3, and 4

——

..50399.59..

50,399.59

SCHEDULE J.—TAX COMPUTATION

_(Component members of controlled corporate group use Form 3920 to compute your tax)

8. Taxable income (line 30, page 1).... i eee ik ies aaa aipeanain

2. If amount of line } is:

(a) Not over $25,000—Enter 22 percent cf line |

(b) Over $25,000—Enter 5° percentol line] ..

Subtract $7,000 and enter difference

3. Income tax (line 2, or line 22 of separate Schedule D, whichever is lesser. or fiscal year tax computation)

4. Foreign tox credit (attach Form 1118).....

6. Balance (line 3 less line 4)... 2.2.2... cece eee ec eee cuiintiehduiaeigeebbuiin Seaeadbeiadieetideaiiiainiidinineadanibed

6. Investment credit (attach Form 3468)... ........

7. Balance of income tax (line 5 less line 6)

eee eee eee ee ee ee ee ee

eee eee ee eee ee eee eee ee

ee ee ee ee

8. Tax under section S41 of the Internal Revenue Code (trom Schedule 1120 PH).

9. Taz from recomputing prior year investment credit (attach statement)...

80. Total tax—Add lines 7. 8, and 9,

Enter here and on line 31, page !

eee eee eee ee eee ee

_7,000.00

201 5 90..22.

233° cs

eee eee eee eee eee ee ee

ee ee ee ee

SCHEDULE FY

_ (Fiscal year tax computation schedule for taxpayers with taxable income over $25,000)

1. Tasatle ; noome ane 30, page })

2. 50 percent of line }

Subtract $7,000 and enter omen

3. 48 percent of line 1 ....

Subtract $€ 500 and enter ume

4 Amount on line 2 or alternative tax ‘serarate

prior to January |

Ss ™

6. Amount on line 3 oF altesnutwe tax Ge; arcte S v)

atter De.

semper 21. 1964. diveded by the 'ctal numer of day

6. Income tax— Az? snd §

‘

“hei

MrIe 34.0

0s 4 Enter fer and on!

mult.t

ne 2 Soh.

Sche ite D) muitiphed by the number of days in the taxable A ceed

.965. diwided ty the tctal number of days .n the taxable year

hed by the number of ony in the taxable year

in the tauable year

tule |

78 80

int, root =o

8. Date incorporsted Lee Le.

B. (1) Did the corporation at the eng cf the tan role yearown dh

fectly or in tirectiy J percent or more of the v_'ing stock

@ a domestic corporation? Yes ®) No()j

nm wmdwidual mertre:shup, trust. or usso-

ciation at the eri of the tazabie yerr own Girectiy of

indirectiy 50 percent or more of the enrperation s voting

stock? Yes) No W

(For rules ot vttr b wan see section 267 jc).)

lt the an: ver to “> or (2) is “Yes * attach separate

schedule snowing

(a) name afire's ard em:

end a Percentage owned

Wf the c ve is “Yes,”

cation no;

loyer dent

M.D Ter claum a deducts

. for expences connected owith

A hunting lo Age [ } 1 workin 3 earch or form C). tishing

camp (. fesort property _. F leasure boat or yacht (j ‘or other

similar facility —7? (Other than where the operation cf the

facility was the principal business) Yes [] No &

(2) The lear.:.3, renting, or owner hip of a hotel room or

suite "| of artment C1. or other dwelling [), which was

used by customers or er euplezers or members of their tarmilies?

(Cther than use by employees while in business travel status.)

Yes) No®

(3 The attendance of your employees’ families at con-

vertions or business meetir gs? Yes) No

(4) Vacations tor er, *yees or members of their farulies?

ewer to (1) at inciude the income Other than amount reported on Form W-2) Yes

for loss) trom — Jv page |. Ferm 1120 of such N é ate oan on aaa Gute Gen ‘ Gj No @

corporat on tort t le y una with or within + Rete oy em — o

your Senate onan. Deas oar ens wh eae Principal business activity Office outfitters

§. Did you have any centracts er subcontracts subject to the o. AD cena product o — i oes

names Ae ; nm ere you @ mer cer of a controlled groum sunject to the pro-

Reneg- rates Act of 1951 Yes () No B wessons G4 section 1561? Ves oO No cr section 1562?

Uf Yes,” see inst K. Enter amourt here Yes &) Not)

k.r ee a hetmantiands I so check he ot eianon Ap 1. parent subs: bary

OS pou ot a tre Surg a ate ' “No & 2 brother : er(}: 3 cor.cinaton of (!) and (2) 5 °

any st--« ot @ t.re.aa corporation Yeu No section 1% 3)

If “Yer.” attach stater.<.2 as tequited by inctrsctica ™ P. we @ you in 1963 @ con + y imo ef a controlied group

. GUNES rhe | sf

&. Arrsuit of iffcome for ince) for 1961. 427, (27.92... ' xn : oar 4 ys ves & Rn shan?

em fr ao 42? 59 7? D were y75 *eys Aa cone! da en

1%) 37%, 114. i?o3 tole, 2.77 Ye, 1 No x 7

16 Th ass-8

Fev 5 1909 (aeeay

Schedule L.—BALANCE SHrETS {

is Citi nhc ceeseesneseseseecenescecceoescesetevnenesss

I. . ins saGensehddantnanenseekegends seceees

4. Investments in Q@oremmet Ss cnecencseuacees:

S. Ciher current assets (attach schedule). .

er REPOST TT TET TT Teer TT TTT Te

7. Other investments (attach schedule). ..............50005s

8. Buildings and other fixed depreciable assets...........

(a) Less: Accumulated omortization and depreciation. ..

GC, Dapbetebbn Ges cc cccescccccsccsessscces prenetesrese

(a) Less: Accumulated depletion. ....

10. Laad (net of any amortization)...........ceeseeeeceeeees

11. Intargible assets (amortizable only). ............66. 00055

(a) Less: Accumulated amortization................ ,

12. Ciher assets (attach schedule)... .........seceeceeeeees

13.

LIABILITIES AND CAPITAL

OR Aened SUE oc vcccsevcvesccedsscesecccccencceces

15. Mortgeges, notes, and bonds pancho | in less than | year. .

16. Other current liabilities (attach schedule)................

17. Loans from stockholders. ....... enneeleeusaonnsecounses

13. \ortzages, netes, and bends payable in | year or more....

12. Other liabilities (attech schedule). ..........cecccccevees

2¢, (a) Preferred stock........... ast

Goo ccccvecissecneness

or car:tal rurplus (attach reconciliation) .........

erve (attach schedule)...... ieneeeevéseeusceoat

stplus and undivided profits. ....

24. Tctal liabilities and capital. .

Parital stuck:

at. m. 1+

9 ©. ««},

moe ors it

*3. Barnes

ATA, TT. 73

Pose? ,

(See Trsiructions)

Beg or ngct tonatiec yeas

> ww Ameont

. ren Total

40's,114.09

«) Aro

tng of taxable able year

176,084.24

674,774.73

5405 937.8)

CRESS |

a\o at

] 007,2!:9,28

a 9€37,099.52

“or! Towa!

319, 725s. 6

eret ie he 74, 084,23

“sia mks

Ome eee eee ceweeeweeees

eres

h, 460,583.10 4430, 305.99

| Wok. 751. 320 ,035 on LSS 614.39 944 ,691,.09

301,250, 30.09 kT 250,.00

a 300 |__ 225 .50«, 33

oat, 692253 3.72 7,535.18

200s 036.9 460,409, 29

14g 1256 4 * 14,929.11

326, 753.71 318,099, 89

305,787.59 ~_ 290, 865.4

476,860.00 376,860,001 “376,860.60 376,860.00

| 56,193,644 56, 493,64

2,200 18)

FURR

ITEMIZED ENTRIES M MADE BELOW MUST BE IDENTIF ED BY ACCOUNT

1, Net income per books

2. Federal income taz...... sineriin ckeaee |

3. Excess of capital losses over capital gains. ...

4. Taxable income not recorded on books this

yoar (temize)

$. Fxpences recorded on books this year not de-

ducted in this return (itemize)... CMCECSS......

Sk |

6. Teta! of lines 1 through §.............) 39 9345.16

9.27 =é

1A "101,08

-_———

ee Schedule M-1. RECONCILIATION or INCOME PER BOOKS WITH INCO- iE F PER RETURN a

. 08 |

7. Income recorded en books this year not in-

cluded in this return (itemize)

7v,

PRA tae}

- -ineu whe rance dn

eaat.

‘ease..d5

- So¥e life

excess..of............

8. Deductions in this tax return not dame

against book incon

.Pric

ne this year ( temize)_......

r..ears.state incame..

10. Income (ire 28. page 1)—

Total of lines 7 and B..

line 6 less 9....

_ Schedule M-2. —ANALYSIS OF EARNED SURPLUS AND UNDIVIDED | PROFITS PER BOOKS = 23, page 4)

1. Po'lance at beginning of year

2. Net income per books. .... vesdonesousuéouen ee

3. Other increases (itemize)_.................. visiomidl

‘Total Hires I 2ond 3... |

Pee oe ee

8. Dictrik

ations: (a) Cash

(b) St

ee ee

eee eee eee eee eee ee eee

6. Wher decreases (itemize). ........ 20.0...

rom ZBOSO

(Rev. luly 1962)

US. Treasury Department

Internal Revenue Service

STATEMENT Ii) SUPPORT

DEDUCTIO.

For Payments to an Employges’ Pension, rofit-Shazing, Stock Bonus

Trust or Annuity Plan and Compensation Under a Deferred-Payment Plan

Name and address Employer taxable year ended

June 30, 1965

IVAN ALLEN COMPANY - ATLANTA, GEORGIA Employer identlication No.

58 0136820

PART I.—DEDUCTION CLAIMED UNDER SECTION 404(a)(1), (2), (3), or (7)

1. Nome ot plans ry : -

Profit sharing pension plan of Ivan Allen Company and subsidiaries

2. Type of plan

(C0 Pension or cnnuity G) Profit-sharing ([) Stock benus

_ July 17,1956

%. U u sivorable determination letter has been received indicating

that this plan qualifies under section 401 of the Code, give date of

most recent determination letter

4. Medium of funding: (Check each applicable box)

(a) Trusteed plan.

CO Individual annuity contracts

Individual contracts containing life insurance

C) Self-administered

(b) Nontrusteed plan:

Group contract:

OC) Deferred annuity

() Group permanent

(J Other (Specify)

C) Deposit administration

CD Individual annuity contracts

See ee esee renee cecereeeeceeeseneeseses

8. Total number of employees as of the close of the year for each of the following groups based on reasonable estimates:

(a) Employees ineligible because

of requirements cs to:

i) Temporary, seasonal, part-tirre..... ......-...-.-.-- —_— (iii)...

(ii) Job classification and not included (v) Pneaeum ¢ pay y (Solely) .

J Lee Te ews Hee

(iii) ny gk « pote vanes not inatetes

(b) Employees eligible for coverage but not covered by plan

(a) Total of all employees (lines (a) (vii), (b), and (c))

(Specify).

= i

(vi) Other and not included in (i) ona w

(iv) Minimum age and not included in (i) through

146

349

(e) If you claim that the requirements of section 401 (a)(3)(A) are satislied, check here 89 and attach necessary data

and computation to substantiate.

“6. In the case ot

(a) Trust—-Attech a detailed balence sheet and a detailed

! statement cf receipts and disbursements

(b) Nontrusteed Annuity Plan—Attach a detailed statement including for each insurer (1) the name of the insurer, (2) the contributions

paid by the employer, (3) the contributions paid by the employees, and (4) the amounts and kiads of premium refunds or similor

credits made available and the disposition

of such credits

(ec) Pension or Annuity Plan—For each year a summary of the costs or hiabilines and adjustments under the plan based on the applica-

tion of the methads, factors. and assump!

cation of the reasonableness therec!.

t. ( (a) ) Total nor deterred cor pe nsation pai do or r accrued {kc for. all employees u under the p plan.

(b) Total nondeferred compensation pais or cecrued fcr all empleo nyees.

Slovece. or their beneficiaries Gelade 3 any insurance provi

Less Employee cortri butene .

(d) If a profit sharing or stock benus plan: (i) danas eriginally allocated in the year.

sted for the kenelit of em wide oyee os former or retired em.

weneny or directly related

1s used under the plan must be submitted in sutficient detail to permit ready verifi-

ERY | $25205 3802.54

-:/$2,125,113,82

{t)_ Amount reailocated in the year (focfeitures)..

8. Determination cf total contributions subject to limitctions:

(a) Contributions by the employer during taxable year (from schedule A, Port II) .............0. 00.0000. $e Ths 786.78

(b) Contribution carryover from previous years irom schedule B. Part I)... 0... o.oo cece cece cecueeeee 8

(d) (i) Total am unt deductible without regard to section 404(a)(7) (lesser of (c) or applicable > benitations $

(ii) Carryover to future years

((c) less {d)(1))

Tu , 786. 78

ruyuvé

9. Statement required with respect to each cf the 25 higho:t-paid employees covered by the plan OR participating stockholterempleyces

who own more thar. 5 percent cf the

ag stock and who cre among the 25 highest pai’

achever is applicable.

(See instructions.)

Percent of 4

EMPLOYEE NAME Is Employee Voting Stack hey em ann [ee

(The letters on each line identify the line entries for the employee Birth yer

in the following sections of the form) —= po han = SS (years)

(a) Yes | No Yes | No (e) )

fo 1 9 SS =A & ai At 32:20) Xf... 1876. = 2

LEE TE: Rim * (2s We ee 34...

3 7" er “REO & 0% Ge Bee 6.44) Xx s+ Wee we

i} ae ijn Sietnedaiieiiaiien inlibittebiliaiieaabaibiainiatnead a es Te en

Rea CN NS TEN

a EE EN TEN

FREER AA eC RN ee CON ee! LOSE TOE! Soe vaeY SUIS SRS REMnS INNO OIE Onn mAenOETEN

SE EE OS ee eS Senne

Ee ee

: er ee ee a a ee ee

SE Ee: SS Se EE Se CNR! Skin NAR aneN

TS ES SC ee

rr ee ee ee ee ee

: en IE Ee ee Se

8 rere aE ae eo

ERE R TE He) ee NERS Seve SS Sen emmenee

STENT TE NS SR CRE See eS NEN Seen

ET OE I TN See

fA Manner Line Ten ree Seas Tee Teemereee — raevemnn

ey eR ee TS eS Se ee Se

| SRS en A FE EE TERS: Si Gl WE SA

v i. | 2A A GR a ke Eee Ser

w i. | TOK @ Te Ge Mee Reeth

x |. et ee i a Gs SaaS ees

y |. a Ge eee Sas a Ee teers

Amount Allocated for the Benefit of the Employee or Beneficiary

NONDEFERRED COMPENSATION (Unclude any insurance provided thereby or directly

related thereto), \2s: Empicyee's Contributions

lf Profit-Sharing cr Stock

Basic Com ae —

ic pen ther Pi » Thi

sie yments Cash Compen- Plan Allocated Amount

Reallocated

sation in the Year the Y

Originally in ear

) — we ee ee ea (ie) a) tm) ()

[me Eat i —— ae 7 r-

A }.220°22.......| | coo Reieclere soc + [25333054] .24060. 30)... 273.13

BR Ans6 - J..-0 Ree 4 o....|. 2116.03 | 887.b4).....228.59

“| tae i ao Ln LAR See

| SS | re AEE CLES: NI

r i. es | RETIRE CRSA eS COS

c .. t. ' A ORS! AEC Pee: Ire

n |. — ) Set (RO SE, ee

1 A | | SEAR SA PR See

J ee | Ht URES ARES PARES OTE TREE AES,

Kk . Ea 2 Ge SR Os eee

w |. yi SASSSS) Ss RR CAE

M |. a | Lata: RAEN RATE. (eS SS Sree

Nn |

° 0 AS! SES RS

P 5 ee Re EA Cee

Q Gees

R_|. a 8 oh ERNST) SP BR) RAS

S eee PSEA. | ana SO ET SSN SENS eRe SEEN

T an BG | tS Ao THe 6. ET VAS We

. |. ST BPs: of SS ROE Sa es ee

oe | | : a aaa BER RE! See DEE

TAX SCHEDUL= - 58-0136820

IVAN ALLEN COMPANY - ATLANTA, GEORGIA

Year ended June 30, 1965

FORM 2950 - PAxT I SEC. 7 (da) (i)

Ivan Allen Company - Atlanta, Ga.

- Albany, Ga.

- Athens, Tenn.

- Augusta, Ga.

- Chattanooga, Tenn.

- Columbus, Ga.

= Gainesville, Ga.

Greenville, S. C.

Huntsville, Ala.

Macon, Ga.

Rome, Ga.

Forfeitures

TRUST FUND BALANCE SHEET

ASSETS

Cash and due from employer

Securities (at cost)

Accrued income

LIABILITIES

Insurance premiums payable

Allocated to members

TRUST FUND i.:COME

Baployer contribution

Dividends and interest received

Insurance refunds

Deduct:

Loss on sale of securities

Insurance premiums paid

Benefits to ~embers

Charged to Credited to

expense employees

OG ST 75,555.59

841.34 1,058.05

795.23 1,000.07

1,365.73 1,717.51

1,140.99 1,434.89

772.19 971.08

1,434.68 1,804.47

3,641.95 4,580.04

731.85 920.35

2,091.82 2,630.61

1,970.80 2,478.42

» 100.70 $ 94,050.09

19,263.31 -

$94,050.09 $ 94,050.09

$ 280.14

19,574.88

15,949.01

$ €1,629.85

748 , 248.86

3,854.92

$833, 733.63

$ 18,265.20

815,468.43

733.6

$ 74,786.78

29,034.18

2,706.52

$100,527.08

35,804.03

$_70, 723.45

58,575.

eee cceecsereescereces

omnore |f

IF PENSION OR ANNUITY +LAN

Form of Pehrement

Benetit

ee ee

ewer seen es sees cseseeee

re eee eee ee

zEewnewer TOs MOO >

Mee ee were ene e esate ceeeess

“—“xAacacHawmovwvod

Total

awe ween eeeee

eee enn ence eens cceee

rere errr

—_

errr rr rrr re

Cee ee eee: woe tere eee ees Lowe ce wees cee eee eres ents Het ee ee ee seeess seceeecoees +

eee cen weet eee ne Heer teens Le eeer cere tees sete ee es sete ee eeere seseeeeesosososesoes

errr riers Serre rr ere ite ee errr re

aes eee en eee reenter cree ee eweweneee see seceeereseees

eee ence ees eres eceeeress comes eres ees sce eee eereees teen eresese seesseeesseeuooe

irre! SPP ee re ie ee errr rT

eee irre! errr rr rrr rr ter ir i rr rr reer. rere TT

weet e ee cee e eee ewer rer een teeensecer esses eeesoresese

eee eee Ree ee ee ee eee eee e ee eeee ewe seees es seeeeeee

errr Peer er errr oo teen weeeee

nee ee Re en ene eee een en eeen nee

SS Seen eee eee ee

Serre ee eee eee errr err One eeeeeeee

a eee ee ee eee cee e ee tener eee eee ee eee

eee eee eee er ee

eee eres Ce

SS eee ee eee ee --

eee eee ee -

a eee ee ee ee eee neces eee ee eee neeeeenereee

eee eee e eee ween ee ees eee ee eee en enens eens

ees acne eeeeeee

ee ees Ce —-

ee ees ee

ees Oe -

tae ee wwe ee eee eeeeee «eee otto

ee ee eee eee ee

tees eee ee

ween ee ween eee ee teen eee se eeee enone

eee ee eee

wereee -- - = eee e ewww wenn ee eeeee

+ seecceee eee e enn eee Leen en ee ec eecceeesone

re eerr rere errr rr. y

10. Have you cttached copies of the folicwing which you cre required to submut for the first tazable year for which a deduction is claimed

or for subsequent years if there is any change in the plan. instruments, methods, factors or assumptions?

ITEM Yes NO ITEM | Ys | NO

@. Vented copies of all instruments constituting the plan in- ce. A summary of the provisions and rules relc'..g to

——p @ust indertures grip annu.ty cormtracts speci ten a) Ex>icyee Cu. Zgoisy reguiresvents for participation in the

@ach type of indiv.guc! contract ond spec. ren copy pian }

oft al y———* ond comcrenensve detc led co xX

ecripton to joyecs, wit emendments t any such ae

instruments x (2) Employee conmbuncns. | ’ x

b. A statement which sets forth (D Exployer conribunons | xX

(1) Nome or nemes of emp! syers x i

ora (@) The bose or furmule for determuning the amourt of each

(2) EXtectve dave of the pian and any amencmen's therero x type ot berel.t and tte regu ———— | tor cotsumne such

| a Benelits and he vesting conJ.tons

D) Method of distribution cr of disbursng berefits (whother ms —

by wustee. insurance cotmpary of ocr erw se) x } |

nee S) The disconmnvance or madiication of the plon and dis- |

(4) Dotes when the ir itr iments or amen dmer's were executed Ba Mbutons or Senet poyments upon Lguidaton or term- i

—_———s aston

(S) Oete of forma! announcement | & | |x

(€) Octes when comprehensive deta led desert on of the plan ‘eg ~ i) a

end of exch arerdment therets were mate ava iabie to 2 U pers ay pam ong ~~ dota — rn 6 at the |

emp cyee. erally rev t3c"s° suru - tere .cing | |

_ = — cco ond if adiumrg the cot tor actual caper anee under '

(7) Sate when pisn wae put into effect | the plan Uncisang acy oat ogs conorgency reserves of

= @ —— Oo a Pacers ans *e 539:9 of any v.sured Costs ce LGBiis- | '

hes inve ved theres) etrla.ticg ther source ong ep ca-

ek toy yf tt qunen taveel. end un the Or: dl @ Gun. a arene doom

> is £ SOME oh ore." cer — 3 aa

p man ed eS a Se x Son of the bene used in valang ine inver:ments ned |

BEST COPY AVAILABLE

Fuye v

PART II. |. DETERMINATION Or ALLOWABLE DEDUCTION

Schedule A—Empleyer Contribution: e instructions) Schedule F catibaten Carryover

Chect whethe: contributions were made i: (Complete the following each of the siz tozable _years_ prior

Cash Cj Other then cach to the current yecr, without regard to section 404(a)(7))

Dates Pad Amount Detes Paid Amount Cumulatve

—e Yeor Amount Amount Gan -

= 000 ~ - oe yover To

ae. +o! 1 O.t.¥e2. co) gscecesae eee Ended Con ontri buted Deducnble Suce creding Yeeor:

fk tial Lene ae ee eae (a) ae 2 Sa SS (d)

GR iedtaaies PRT 19

as i catet deaeebielnadaledeneaiad 19. = PND

| Paid 9723-65] 59,786.78) seeae Se eee a

nntienmmms eT eT TN ———~ f soiadanladal sniieiidlaibiiadiiedelineiimaie

NTN TET aL <a 5 Sicidliciidtttistinentasiahiatindi vanineioaiiiitnibenel

queen pupeseneinen Te eS lena 19...

onset queseseesen eeecevescese eeveccancaveseeed Cumulctve carryover equa! ‘$ column (d) from previous year plus column

ee a ee | Total 7h, 768.78 (b) for current year. less column ic) for current yeor (See instructions)

SCHEDULE C —PENSION TRUSTS AND ANNUITY PLANS (Complete either I or II)

1. Section 404/c)(1)(A) and B) Limitations

1. Total nondeferred compensation paid er cecrued during taxable year to all covered employces (from line

Pt cites oh coabinkss cavbsadcuvew eee edcmaebackseeeaknwatsedsaneestaantaheenetens $s anil

2. Limitation under section 404/a)(1)(A)—5 perc -t of line | (unless limitation has been reduced) ES OR we

3. Limitation under section 404(2)(1)(B) uf aggregate cost methad is used (See Regs.. section |. 404(a) -S(e)) $

4. Total of lines 2 and 3 if aggregate cost method 1s used , eae sesatue

8. (a) Gress annual premiums under “Individual Contract Plan’ (see instructions) SRO

ee EL.) da og dik on ab saab eaeiees sunen obencbedeseen $

II. Section 404 a (1) C) Limitations

1. Normal cost {current year’s service cost) iakubieissiiaieaadeus , —

2. Total past service or supplements! base $

3. 10 percent of line 2 (see instructions} ' Sonveunwedaiad FASS

4. Total of lines | and 3..... nla euenEceussakkke ah’ sueoksesde! iadaddediibdiasaeted

SER IEE A POD A OA RE RAIA ETP RAST IID OP LTPP aK

6. Net limitation Tine 4 less line 5 $

SCHEDULE D.--PROFIT-SHARING AND STOCK BONUS PLANS (Section 404.4 3 (A) Limitations)

1. Total nondelerred compenscticn paid or accrued for all employees uncer the plan from line 7la), Past) $ 1 905 Bos cl)

2. Limitation—1i5 percent cf compensation shown on line | $s 104.270, 38

3. Contributions by the employer during the year (from line 8(c), Pan 2D) $ 7. eRe 7a

4. Contributon carryover from previous years (from line 8(b) Part 2D $ ae

8. Total contributions subiect to limitation (from line Sic). Part 1 $ TL ..786.75 _

6. Credit carryover (Attach computations) $ -

2. Limitctions Primary (lesser of line 5. or line 2) or secondary’ :, $ Th .786. 78

*Secondary (sr c'lest of ime 3 cre 2 pics ime 6 of two times line D

Secor dary ints?

SCHEDULE | E- ~ Section 404.e 7 Limitations.

nape escoriy ine 6

Hee 18 3 Sed: “orryover on

See instructions

3. Amount deductible for year under section 404( (a) (7 3)(7)

(a) 30 percent of covered compensation in year

(b) (i) 25 percent of covered compensation in year

Gi) Tete! amount otherwise ded

(iii) Smaller of (i) or (ii)

Gv) Carryover from prier years under section 404(a)(7) (attach computation)

(v) Sum of (ii) and (iv) ; sa ; $

(e) Amour! deductible (lesser of (a) or (b)(v))

&. Car-yover to succeed: 3 years under section 404(0)(7) (line 1 (b)(:v) plus line |

uctible for year

bi iu) less line ! (c))

PART Ill. DEDUCTION CLAIMED UNDER SECTION 404.2 5

_!. Type of pian

2 3 Penston of cnnuity C) Protit.shari ring C) Stocks bonus nus _) Other pian of deferred compensation

3. The amount of the acne $ oe | $. Was th @ Qmount deducted paid

se number cf emcloyees covered | C) Directly to cn employee a former employee or his beneficiary

l nur be: o ployees emzioyed

@. Bove vou attached a statement contsining such :nfermation cs is necessary to show thot the deduction is net allowable under section

-404/a 11 2) WD. end (7). thet the emeun: paid is an c-dinery ard necessary expense or an expense tor " producner of income

and that the employees nights to or deri vei trom the ems lover $ contr: Dution or deterred compersation were noniorteita die at the ime

the contribution or compensation was ped? 0 Yes [2 No

=_—_—_—_——

RUS We Cer PTS Wee er

Form 3468 MPUTATION OF WIVESTIAENT CRE. —1f> TO BE ATTACHED

U.S. Treesury Dere~ment : . TO YOUR

Internal Revenve Service | Ortexadle year beginning . July 2. _..., 1964, ending tune 30 1965 TAX RETURN

Name (es shown on page 1 of your ‘ax return)

ee TVAN ALLEN COMPANY _

Address (number and street) ad

BOY 1712

City of town, and State

ATLANTA. GA. 30301

1. Quolified investment in new or used property

NOTE: Include your shore cf investment in property by o partnership, estore, trust, small business corporation, or lessor.

| | |

Type of Line ute 2 | Cos — | seh Qvolified investment

property | — - . Aost — (column 2 x column 3)

(ec) 4106 | | 33%

NEW ee er ee ws

&) | 6108 | 6655

PROPERTY |

}

@ , } 100

~ weno 16,452.00 cow war ghS2.00.

USED i | 4106 | 3314

i TO AR a eR

(e) 6108 | 66%

fh dollar | rennet

inareciion) | @® 8 or move 100

vnww

. Total quelified investment--odd lines t(c) through (A)

Tentative investment credit—7 of line 2 (for public ut lity property, enter 3° of lime 2)

Carrybock and carryover of unused credit(s) (arrach staremen’)

. TOTAL (line 3 plus line 4)

COMPUTATION OF TAX FOR PURPOSES OF LIMITATION

6. (a) Individuels (enter cmount from line 12, pose 1, Form 1040)

7. Individuals, estctes and trusts

Less: (a) Foreign tox credit

(b) Dividends received credit

(4)

8. Bolence (line 6 less line 7/d))

LIMITATION BASED ON AMOUNT OF TAX

(Married persons filing serorctely, of /ictes groups, estates ond trusts—see instructions)

9. (a) Enter emount on line S or $25,000, whichever is lesser

(b) If line 3 is in excess of $25,000, enter 25% of the excess

(c)

Tote! (add lines (e) and (6))

Tote! (edd !.-es (ce), (b), end (c))

10. Investment credit (enter omourt on line § or Dic), whichewer os lesser)

ne 5S ee

1.15)..64

SCHEDULE A

if any per of your investment in 1 ebowe wos mode by © corres, estore, trust, smell! business corporation, or lessor complete the following:

Nome Address —_ —

(Pannenbip, estate, trust, etc ) | New Used | Life yeers

CRAG PTE TESA $ 7 = ‘

AS INET PRD We Pe Te ms :

= Os G :

1 "71

eee

GENERAL NISTRUCTIONS

A. Who lyst File—Any indi il, estote, trust, of corpore-

tion eleiming ¢7 investment credit eguinst its tox mus! attach this

form to its income tox return. Peortnenships ond smol! business

corporations ore not required to file this form becouse the credit is

cleimed by the poner or sharcholder However, partrenhins and

smell business corporations must cttach o statement to thei returns

showing the cllocation of investment to the portners or shareholders

by omount, type and life of property as shown in item 1 of this form.

Estates ond trusts which apportion the investment between the estate

or trust end the beneficiaries should in addition to filing this form

ettach o statement showing the allocation of the investment among

the beneficiaries.

B. When Allowed.—A credit is allowed against your tox for

investment in certain depreciable property hoving on estimcted use-

ful life of 4 years or more. The credit is allowed for the first yeor

property is ploced in service, even though under the depreciction

convention used you may not be able to claime deduction for depre-

ciation on the property until the following yeor.

C. Property Defined.—The investment credit is applicable to

fe) tongible personal property, (b) rea! property (except for build-

ings ond their structural components) if used os an integral port of

morvufocturing, production or extraction, or used os o reseerch or

storage facility in connection with these activities, and (c) elevators

and escalators, if their construction, reconstruction, oF erection is com-

pleted by the toxpoyer ofter June 30, 1963, or if they are acquired

oher June 30, 1963, and their Original use commences with the tox-

poyer ond commence, cher such date.

The investment credit s not coplicable to (1) certain property which

is used predominantly outside the United Stctes (2) property used for

lodging or in connection with furnishing lodging, except (ce) property

used in certain commercial facilities located therein (such a5 @ restau-

rant) or (6) property used by o hotel or motel. (3) property used bya

tax-cuempt orgonizction (other than ino business to which the unrelored

bus re15 income tox applies) (4) orcperty used by governmental units.

(S) livestock (including recehorses)

D. Election for Leased Preperty.—A lessor moy elect to

trect Gn invesiment in new property os if mode by the lessee insteod

of the lessor. ve lessor mokes this election, then the lessee is

treated as if he 2d acquired the property (see section 48(d) for

determination of basis).

Where a lessor makes an election with respect to !eaicd propery

such election must be made in accordance with section 43(d) and the

reguiction; thereunder.

E. Replacement Property.—Where insured property is lost or

destroyed os a result of a casualty or is stolen, reinvestment of the

insurance proceeds in replacement property may not be eligible for in-

vestment credit.

F. Disposition of Property.—Where property is disposed of

prior to the life used in computing the investment credit, the tax for

the year in which the p

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