Appendix — Ivan Allen Co. v. United States
Supreme Court brief1975
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6
3.
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.
4.
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.
5.
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
Taxpaycr 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.
EL TERRES
g
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 accumulated 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.
7.
Taxpayer paid said additional income and accumulated
earnings taxes to the Director of the Internal Revenue
Service Center, Chamblee, Georgia on or about June 1,
1970 and paid the interest on said additional income and
accumulated earnings taxes to the said Director on or about
November 20, 1970.
8.
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
8
prior to the filing of this suit have expired from the
date on which the said Claims for Refund were filed.
9.
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.
i.
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.
” — — om
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
PPS RE PARR erred samme es
2 ot
ball
| I~ NO WTN ON @DWO}H
POOR COPY
- Exhibit A
-- — ne eee +
Le ree a tre ee ‘en arr sal brvbran feb Ut tte . oe
’ “ 0°35 ra ok a 4 (bite! vet
ites Rely LYE} TO PIED WITHTHE DeteiCh DIELCTOr WHERI
ASSLSSMERT WAS MADE OR TAK PAID
The Diath t Daecter > nN ercdecote an ‘the block below the bend bind of cham filed, on! on mn, sa hes cite ned
{J Refund of Toxes Ile jolly, Crroncously, or Uxcessively Collected.
a! Refund of Amount Paid for Stemps Unused, or Used in Crror or Excess.
O Abatement of Tax Assessed (not applicoble to cstote, gift, or income taxes).
7 PLE/ SE TYE OR PRINT PLAINLY
Nome of toapayer of purchoser of stomps
Ivan Allen Comp..ny
Number ond street =—_ } City, town, State, Posto! /1P Code
P.O. Box 1712 ! Atlanta, Georgia 30301
Fillin cpplicette iten: sh Hach letter size sheet: :. spose is not su.sicicnt
oe. Your socic’ security number iia s number, if yount return b. if on employee, enter employer identification number
: : : ‘ F
~ : ee ——— 58-0136820 a
c. Distret in which return (if ony) wos filed d Nome ond oddress show: on return, if different from obove
Dis. Dir. Ga. same
e. Period — if for tox reported on onnva! basis, prepare seporote form for each toxoble yeor | f. Kund of tox
from July 1 .1964.te June 30 1965 Income __
g. Amount of oss. snert : Dates of poyment "$885. ,.00: 10/1 5/64 4; $885. 5.00: 12/15/64;
_ $252, 127.62 $22, 125.09:4/15/65; $22.125.00: 26/15/65; $60,000:9/2/65
h h. Date s: stamps amps were purchesed from from os pope = be: dd eee tox, $ 54, 118.9531 fl 7/653 :
Government ; complete computation below) $ 91 ia 88 . 67 26/1/70
$87,747.32 | s
k Thec cnt believes thot this cian should | Le ollc- ed for the foliz. ng reasons
See Attached Statement
COMPUTATIC'Y OF INCCIME TAX REFUND Income Tox
. Tax withheld
. Estimated tox poid ._.. eee wears
. Tox paid with original return... 2... i)
. Any additional income tox poid .... 91. 3 3B eo
. Total tox poid (Add lines 1-4). . “252, 127. 62
Less: Your computatian of correct tox | 164, 380. 30
87,747. 32*
=0=
87, 747.32°
. Amount of overpoyin st
. Amount previously ref ‘ed
eo ONOWR WN >
« Net overpayment tEnts riniteni cheval
Under penaltics a perjury, | cectare ticct thes claim, incluciag any occompanying schedules and statements, has been cxanuned
by me -nd to the best of my knowledge anil belief it is true end correct
SEC INSTRUCHIONS ON raVERSE
FORI, 843 (: ov. 7-65)
such greater asount as may be leqaliy refw dable.
12
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 oft doing business forms which Mr. Allen, Sr.
13
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.
RE — re RD PETS RNNNNECEmENNEIaEeemenEneereeeeecen
14
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 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 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. Tazxpayer’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).
15
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 promotional opera-
tions. He also continued his primary decision making role
with respect to Taxpayer’s major expenditures, including
16
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
_ 17
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
18
Allen, Ivan Jr. Trustee U/W Charles M. Marshall 9650
Allen, Ivan III , 2365
Allen, Ivan IV 110
Allen, Louise R. . 2115
Allen, Margaret Poer - 4 ee)!
Ball, Jack T. 20
Brumbelow, Morris 10
Carnes, John 850
_ Dickerson, Elmer : 300
Estes, Robert S. . . 40
. Floyd, W. F. Jr. | 515
Glenn, W. H. 2400
Hampton, James F. 25°
Harris, Andrew D. 2
Harris, Grady W. . 2
Harris, W. D. | | 475
Jones, Hayden C. Jr. 575
‘ Lanier, D. B. 100
Layton, Estate of Charles R. 75
Murphy, J. H. 754
Ownby, O. G. | 130
Ownby, O. G. Trustee for Roger Paul 10
Ownby, O. G. Trustee for Scott Alan 10
Patrick, James H. 25
Pettes, Thompson P. 25
Richardson, Walter 20
Snellings, Walter Arnold 22
Tebow, D. L. 200
Williams, J. C. | 500
Wilson, S. W. | 75
Winslow, T. E. | 160
19
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
20
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
21
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 $535, 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
22
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.
_— 23
7 Exhibit B
a Dee ctea's Cees
foun us
Se ameNDED Cie? por ..crunp
Mitel wanes Se ne
(Date recent)
The In: cinat Hevenue Service will inticate in the block Lelow the kind of «claim tiled, and fill in, where required.
oO Refund of Taaes Megally, Crroneously, of Lxcessively Collected.
a) Refund of Amount Paid for Stamps Unused, or Used im Error or Excess.
[J Abatement of Tax Assessed (not applicabic to income, estate or cift taxes).
Please Typre or Print Plainly
H Name of taxpayer or purchaser of stamps”
| IVAN Alu.EN COMPANY
Number ands street
: City or town, State, and 7'P code
P. O. Box 1712 ' Atlanta, Georgia 3030)
Fill in applicable items—use attachments if nccessary
b. Employer identification number (if any)
58-0136820
d. Name and address shown on return, if different from above
a. Your social security number | Wife's number, if joint return
Internal Revenue Service of ice where re-
turn (if any) was filed
Dist. Dir. Georgia same
@. Period—if for tax reported on annual 64 prepare separate 30 for each taxable "E5 f. Kind of tax
prom UUlY Le 194 2 Tune Income
FE oa RUA ney
h. Date stamps were purchased from Govern- | i. Amount to b- refumded (If income roy
ment complete computation below)
$87,747. 32*
k. The claimant believes that this clzim should be allo. J for the following reasons:
See Attached Statement
COMPUTATION OF INCOME TAX REFUND Income Tax
1 Tax withheld... s 2 «8 © © 6 ee 8 8 6 we we 8 ee 6 8 wm Iecw ews ngninn senpn ta eareanas pecess see
2 Estimated tax paid. 2. 2. 2 1 6 6 ew we we ee ee ee ee ee 46s 020.00 ose
3 Tax paid with original return. 2. 6 6 6 we ke ee ee ee ee ee ee wey: 3 i8. 95. es
4 Any ac’ ‘tional income tax paid. 2 2. 1. 1 ew ew ee ee ee ew we 91, 788. 67
5 Total tax paid (add lines 1-4). ww wwe wee ee ee ee ee ee ee
6 Less: Your computation of correcttax. . 2. 2. 2. 1 6 ee ee we ee ee et ,
7 Amount of overpayment. 2. 2 2 6 6 ee ew ee ee ee ee ee ws
8 Amount previously refunded. . 2. 2. 6 6 6 ew we ee ee ee ee
9 Net overpayment (enter in itemiabove). . 2. 2. 2. 2. ew ee we eee ee 7, 747. 32*
©
iN
nf
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ve
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ea
Under penalties of perjury, |! declaf® that | have exami:.cd this claim, including accompanying schedules and statements,
and to the best of my knowledge and belief it is truc, correct, and complete.
DAO onions sc snsesescveccsanecseveesescsceecesenetessicns tesessceeeee
DGC occas scccccccsvccccndnerccscdenvesceesesceesecg BDecsvsces. Sn nnerlusospsieheshevseconseadsccdenoseauins ceusasseenssegsannesiacdesdssensiesunsrseiwas spuunaue Coseete get teatentsRemeenea
*P1TS' assessed interest, wil if MAVWSUCS OC’ EREPSon as providde #8 1atyy to”
such qreater amount as mav be legally retundabie.
-- Se me etre rem ae: ~s s ewes i ns
Sorat er oe
24
STATEMENT AMENDING IVAN ALLEN COMPANY’S
CLAIM FOR REFUND OF INCOME AND ACCUMU-
LATED EARNINCS 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.”
25
(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 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.”
(c) PAGE 7, THIRD PARAGRAPH, which reads:
“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
26 :
A
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, Laxpayer’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 stifl 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
27
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 ti. ueficiency and
interest so paid with interest thereon as pro-
vided by law, or such greater amount as may
be legally refundable.”
28
(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
29
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
_ 30
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.
—- 31,
Exhibit C
o- a on (ret
' .
. pe . ( obs tbe
| woh in mutty y. Vt DE rh bnene nok WH
| ah MD Sett POL VAS TAA Gn TAM PAID '
Wat WO et the nedon ete ae Me EE Bee Be Dene Dat eb anne Caled, evel Goll an, wlio ees ccaqanee il
-
{. | Ke fete b ben OMe qally, Lie ecusly, or Pacecsively Collected,
{. ] Petal of Acro: Bord for tories Uauod, of Urdd in teens ew Une *S, \
[. | Abatement of Ton Agee (net oppheaty le toe stote, gift, o income taxes).
a _PILASETYPT CS PR PLAY
Peon of taeg: 6 Oe CO Ce
IVAN AbD COR ) ‘i, r _
Hun ber por sheet i Cuy, town, Stote, Postel 21? Code
aoe Nox 17)?_ __t Atlanta, Georgi a__ 30301 a
_billines “inligetale iiem—/, ftuchiaiter tie shoots if rpuce is not suticie nt
6. “Your P tnciol secunty nomen w: fe's ovale, f jount return b. Wow employer, enter em ployer identilicotvon number
$e fo bE, 58 -0236820 _
Ps Distt wn which retorn (Hf ony) wos 9 fis r d. Nome ond oddress shown on return, of dierent from chove
pis. Dir. Georgia 7 same
e. Perod—-if for tox reponed on annul boon, prepare separ ‘e form tor gach ch taruble yeor 1, Kind of tox
from July 1 + 65.'e June _ 30 9 66[.. Income_
tf. Amun of cucnmeant 1Dens of poyment $3, 200212/15/65; $15,800.20: 3715/6675
| $325,671.00... $15,799. 80: 6/9/63 ; $100,102.50: 9/15/66; $100, 39 of
. DX eeere ert stetatintin tit Mi de
h. Dote stone v cre purchosed i: rom i. hanount fo be & tunded ( aw income 2 10%, i. Ann ne, 4837 eo oF
Government complete computation below) gift $90, 616. 14: 6/1/70
. ‘
et. _|.s 81,520.80 $
k. The <' velicves thot this ¢!. 9 should be ollowed for the following reosons: "ge!
*
See pAttached Stzetement
H
COLWUI-ATICGN OF INCOME TAX RISUND Income Tox
a eed seete do's a7 kaetatestadainicacness .
1 2. Fstimoted tor poid. eee cece cee cues au ga wd easeeeie Ga Ge asic sus ctee ve aon woe. 3 4800.00
| 3. Tox paid with original return ce ete eee e reese eeneteeeneennnns 200, 204,95
4. Any additional income tox poid 2... cece eet beet tenn eeenenneneeus | 90,616.14
5, Total tox poid (Add lines V-4). 0 cc ee ee ete e ee cee eens renee efenees 325,621] .09-....
a
| 6, Less: Your computation of correct aK. ee ee ene teen ee tebe ee ee ee eens | 244,100-2
| 7. Amount of overpoymmont ee ee eee eee ee eee beet etn teeeeeeebenneue -.-B1,.520.£0%...
8. Amount previow ty refunded. 6. cece eee e eee eee e eee beeeeetees a Ce -0- =
| 9, Net overp: "yureut (Frier in ers i above) TeLe eT TeTePE Coe Te PELEEETILE REET ee ak 520, BO* |
vider penulley: t of perjury, | declore that this claim, including any accon panying schedules ond stoiements, hos been exomined
by me and to the tust of my knowledge ond belief it is true, ond correct.
DO oviinisce secasccccccesess ccsevscscesss g-WOcssiwses .f ‘cubkesessesacscsveni scnassncentessesascssensosensese jSébhGionecassasesacevespesecsecisaessave
——--
SCC WNSIFUCTIONS ON Lives
| P TORM 6843 (iow. 7-65)
Or such greater amount as may be legally refundable.
Sd
32
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
_ IL. 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 tie taggih 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.
33
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.
34
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).
35
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. .
Il. Salary Paid by Taxpayer to Ivar. 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.
continved to receive daily communications with respect
to the business problems confronting Taxpayer and often
made daily 1esponses. 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 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
36
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 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. constituted unreasonable compensation and that
the payment was not therefore deductible. Accordingly,
37
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
38
Allen, Ivan Jr. Trustee U/W Charles M. Marshall 11145
Allen, IvanTII ~
Allen, Ivan IV
Allen, Louise R.
Allen, Margaret Poer
Ball, Jack T.
Brumbelow, Morris
Carnes, John
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 — 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.
2731
179
2442
131 .
23
1l
892
39
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 cdpital 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
font ai tae.
40
\
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 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
41
| 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 zcasonable 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 ari 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 and 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.)
a a aS si SOR LINE
42
(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). i
(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.
43
Exhibit D
a sell
ee OD AO GE LOTS OOS Me
_
I1A4
form u4A3
(Rev. Hae 1968)
Depertmcot of the Treasury
foternsl heve que Service
OG, Nee
AMENDED ortenang | FOR REFUND
The Internal Revenue Service will indie ate in ‘the block below the hind of claim filod, and tll in, “where required.
0 Refund of Taxes Micgally, Crroneously, or Excessively Collected.
(—-D Refund of Amount Paid for Stamps Unused, or Used in Error or Excess.
(D Abatement of Tax Assessed (not applicable to income, estate or rift taxes).
~ Please Type ¢ or Print Plainly
— eee we
Orel on “TA eens
(Wate received)
Name of taxpayer or purchaser of stuinps
IVAN ALLEN COMPANY
Number and street City or town, State, and ZIP code
P. O. Box 1712 Atlanta,
Georgia 30301
Fill in applicable items—uUse attachments if necessary
a. Yorr social security number Wife's number, 7 joint return
b. Employer identification number (if any)
58-0136820
c. Internal Revenue Service office where re- | d. [tame and address shown on return, if different from above
turn (if any) was filed
Dist. Dir. Georgia Same
@. Period—if for tax reported on annual basis, prepare separate form for each taxable "66 f. Kind of tax
rom. VUly 1 1999, t ... June oats 557 $18;8
g. Amount of assessment
, 325,621.09 tie NEAL 051499: 80
03991 S98 afte
r
887102. 44
h. Date stamps were purchased from Govern-
ment
i. Amount to be refunded (if income tax,
complete computation below)
$ 81,520.80*
tate, or gift taxcs)
$
j. Amount to be abated (not applice!'s » to income, es-
k. The claimant believes thet “As cirim should be allowed for the follow.: ”Feasons:
See Attached Statement
COMPUTATION OF INCOME TAX REFUND
1 Tax withheld 2. 1. 1. 1 1 et ee
2 Estimated tax paid. . . . . « «
3 Tax paid with originalreturn. . . . .
4 Any additional income tax paid. . .
5 Total tax paid (add lines 1-4) .
6 Less: Your computation of correct tax.
7 Amount of overpayment. . . .
8 Amount previously refunded. . .
| 244,300.29 _
325,621.09.
..81,,520.80%
-0-
9 Net overpayment (enter in item i above) .
81.,520.80*
Under penalties of perjury, | declare that I have examined this claim,
including accompanying
and to the best of my knowledye and belicf it is true, correct, and compicte.
Dated
fo (NU rec HOUs OM
Jlitat Petts “
bougabiw
aVEROE
tintroon
*Plus assessed interest, A
Vert Utictik
Ww ith
Such atestter Amount as
Whey py
44
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 2 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.”
45 |
(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.”
(c) PAGE 7, THIRD PARAGRAPH, which reads:
“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.
46
(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
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
47
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 avail-»!> for use in meet-
ing Taxpayer’s reasonab'e » ness needs nor
generally available for dix a:tion to its
shareholders. However, eve’ the cost of
Taxpayer’s marketable securitie ‘e included
in the computation of Taxpaye.’s et liquid
assets, the cost of one of Taxpayer’s « verating
_ cycles for the taxable year in questicn 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
(charges italicized):
48
“(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 hy Taxpayer con-
stitutes an overpayment for which Taxpayer
is entitled to a refund.”
(i) PAGE 14 is hereby amended to ade the following
contentions (5), (6) and (7) with respect to the
interest paid by Taxpayer on the accumuldted
’ 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, 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
49
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.
50
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:
1.
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.
2.
Admits the allegations contained in paragraph 2.
3.
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.
4. |
‘Admits the allegations contained in paragraph 4.
5.
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
51
the taxable.years in question, the Secretary of the Treasury
or his delegate determined that the alleged salaries which
the taxpayer paid Mr. Ivan Allen, 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.
6.
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.
7.
Admits the allegations contained in paragraph 7.
8.
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.
: 9.
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.
52
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)
53
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 cage
may, subject to the discretion of the Court, be held in
abeyance.
3. The taxpayer is a Georgia corpcration 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
54
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.
55
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:
40 shs. Arlington
Development Corp.
common stock
~ (unlisted)
300 shs. C. & S. Capital
Corp. common stock
(listed)
$600 Commerce and
~ Jackson County
Development Corp.
bond (unlisted)
149 shs. Minnesota
Mining & Mfg. Co.
common stock (listed)
165 shs. Southern
Airways common
stock (listed)
11,140 shs. Xerox
Corp. common stock
(listed)
10,090 shs. Xerox
Corp. common
stock (listed)
$30,600.00 Xerox
Corp. convertible
debentures (listed)
a
(payable as capital gains taxes).
FYE FYE
Cos FMV Cost FMV
$ 1,000$ 1,000 $ 1,000 $ 1,000
1,650 788 1,650 825
600 600
3,046 8,605
600 1,650
116,701 1,573,525
102,479 2,479,617
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 a 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
ae
56
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.
ee
57
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
accumulated earnings tax involved in the case remains to
be resolved, ie. whether one of the purposes of such ac-
cumulations was avoiding income tax with respect to the
taxpayer’s shareholders. In the further proceeding, if
any, to resolve said remaining factual issue, either party
may, subject to pertinent objections, offer any evidence
therein which is not inconsistent with the matters stipu-
lated herein.
June 12, 1972 /s/ Kirk McAlpin
Date Counsel for Plaintiff
June 12, 1972 /s/ Jack D. Warren
Date Counsel for Defendant —
59
Exhibit A
ees TS me, leet ng atin ie 41% '
rout 2IABE 9S. » oth BitsA7: ise He BER we LAX RE: al—ifd4 92471579 ia
dbp at her gp pny of ether tasabie year bepaceng on SUL -accce nk on bee MOE Te EL y--- -W.£5 ISI
REESE o— ‘ous fi : E. Explover bies..ticat.cn No.
* pecan, ans jyan2cc2s co Paty 1565 co SE 6 58-01 36520
o eS on ROX 1712 5. County in which tc -o%o¢.
& Fers-oci felting CoO ATLATTA Ca 3022}
fy O55 Toss ncwscue ©.
5 - $2.77 — 18
HAPORTANT—All applicable lines and schedules must be filled in. If the lines on the schedules cre not sufficient, see instructi
1. Gross receipts or gross sales catebeinsssnnenceennernonTe Less: Ret: and al! 2, 501, aa ts ¥
62 | 2. Lees: Cost of goods scld (Schedule A) and/or operations (attach schedule)........+--2.0eeereeeeeees 10 571.01
ee Oe I is so occ scopphceboccanesens rates oo ewahece pacer pendinneeCs ana enee 30 ak ‘ye
Be Ee IR sihicissstrssietnsnsssessmpniasdieetbesecorornannercivveviseredlipnéiions 59,293.63
& 5. Interest on obligations cf the United States and U.S. snitvenieiialiies ikesuaawienen Lcacksdsadenciouse
oes sey ba enbacsenoccarser® py ge pene eres ain FEES 43,203.26...
a EE cevovccccnscvesoocees Side ch edewovereesseava bhbsenedarvapanckedwnl +esi nie khee kanes ee 159,325.76
GPE Be BepRGS oon cc cccccccdcccececcccdcccccccnscesccsccccesccvercceversiuceseerensovevccovees
& ik ales Gee Seas Seni Mibadiie®. «025.0050 0.0<cccsevssncgnoovesnvaovaccnctasetosvconss
OR, Ciar tins Cans GNI. 5 abs ccge cc pccececaisccdcccpicaveccccovecavevsverss vevepivevasese
Ai SAE teauehn, Bete DOr 10 ti eecctrecceresistccecctnneisiessabertecestbate
12. Compensation of officers (Schedule E).........2-:cccccecceceecerseceeeceeseten epvenaectsrtvpecedt
13. Salaries and wages (not deducted elsewhere)..........0.ccccccsccccccccccscscccseceveesedespisvees
14. Repairs (do not include cost of improvements or capital expendityres) enies cesbubessshasiounaees tas
15. Bad debts (from Schedule F if reserve method is used)........-..ccccccccccececceeecee ondesébsceen 3
DD, BOBS Fins ncccapevscvneviczes paWinas vais Shins dpEDMAD EDD ANsRed SNC ede abe nsepverbigvonces 4053
Oe, Fee CO ID, i ivcicscacericnceccccvapccbovctedavacesodvorrssvetesecsarteverpescapese
i Ns k bas ubten ee nd ceecbiebecnaeacebeerecnetinesoeqenesessovsesneaerrsse
% * clits as ile petb Getteahs aiblibe~ene tnibuttions bet Valldliedd..........022+2-2poneosanes>
(é) . Losses by fire, storm, shipwreck, or other casualty, or theft (attach schedule)..........0.scecererereres
Ea 2 I BI AI tress pepe ckss sas ij nesconsvapsasestndncasssarndssdewasieteraiens
£ 22. Depreciation (Schedule G).......... ‘egsesvanesvbapeeme pr edenveeven peqececcoes deneeneneeeeenetes
aA SB. Depletion Glades sche. oi os ccs cc ccccncsceccvccesevedscoscesveveessevvdscee dca cupaniebsevane
BA | 24. Advertising .........cecececccceccrecseeecsrecssscecsserstsrcetseneasssreteseeeeseeenenesenes
@ | 25. (a) Pension, profit-shating, stock bonus, anmgtz,p\ Tre Se BORG ey SPAT maN ete AS ERSES.. 1000 «00 Seas
(b) Other employee benefit pions”? 3- “pstreetions) Se Peas ROLES hb bis tte PME a aR bee ee ote
26. Other deductions (attach schedule cakmueas ween teks auger beset ° cuss oes audedaees cea wenes ree SH
21, TOTAL deductions in ines «oo BE 15, IS35......... ISG MEE ask BR 2,009 ,013.2
28. Taxabie income before net operating IDa Potptigp 907-7 deductions (line ! 1 less line 27)......... 391 4b5 41
29. Less: (a) Net operating lors deduction (see ingtpyct Rate schedule). . i
(b) Special deductions (Schedule ! DepiiaR = gg Bis. 50.399. 22
ee: Sees Seen Cie Te AOU re occ seer chbd chcce cekschenieto ck cedie bebe ve ki wateee 341, O45.52
31. ESTAS, seme tae Wels Wand 00 Saale Ofc os ns vcs owe cde or bck ape> gas Consaas cos 160.335.
32. Credits: (a) Tax paid with Ferm 7004 application for extexsion (attach copy)... f
, (b) Payments and credits on 1964 declaraticn of estirncted tax......... 4
' (c) Credit from regulated invest nent comrenies (c't2ch Fem 243%. 106,020.00
i DUE. Enter beiarce heze > 54 310.95
33. If tax Gine 31) is larger than credits (line 32), the balance is TAX D
34. If tax Cine 31! is less than c-edits (ire 32)
| 25. Ester emount of line 34 you went: Credited on 1265 es.inioted tex - Reiunded .
Eviter tho OVERPAYMENT here ——-——>
tue cesi cl my arcwledge ord Ciel it ig true, correct, ord ccmrlete.
Under pencities cf cerjury, 1 ceciare tnat I have excinine? this return. im a ing schecules oe fictements, —s te
If crepe
cacil denna ct which he bas cny srowledge.
red by o pericn cther ther toxpover, his decleraticn is besed
i» i
peeeens Ny i/S2
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: Gubracy, AWRINCE & HORTDI
‘ CEINNED PUsu.c ATCCUNTAYTS
a See eas Kcisadad coi os canae rok enone BUC ts Wee Ndi ee
——--+
5
eC --16—722
2
Torn 1120 0964)
Schedule A.—CCST OF GOODS SOL (See instruction 2) | 1. Was taventory valy &—Coct 0 lower A on Or market Eb
(Where inventor” are an incom de:. “mien factor) | - LIFOC) ether 2)?» ether, ettach explana
se a ura meal = 2. od pony ae bren made to inve. tory? Wes i wO lt
1. Inventory ot beginning of year............ 5 9405537.61 anne pew enh pompated on tho vee
2. Merchandise bought for menufacture or sale.| 3,2 So oe : s Spascetne petadiade ie om the te‘al iaventory
3. Solaries and wases...... pp caitesecciions 2, 7h1.81 : fen individual items.
—_ « pa if “a’ ">" pp pcted. gute the percentage of write-
4 Other costs per books (attach schedule).....|Ti2, 22.43 jh Nh ¢ = ‘a’ enter the dollar
‘omouni of wrile-downs $.. 21,324 51 “alan orsdette
079 BS 25 estimate that the figure is an esti nate
CD encbiocniaccassacdeapachapuieors nes 52079 sT 3. Was the inventory ver:fied by es count during che year?
Yes EZ) No It attach explanation
was
6. Less: Inventory at end of ysar............. 569,214.25] « ney Beto substantial change in he ft don
1. Cost of sold (enter here and on lire 2, : ven the opening a: osing in
bf No if “Yes,” attach *
ad erent eee 4 .530,57].08| som Radettenn euedicamensenan Eka
Scheduie C.—INCOME FROM DIVIDENDS
© Geneetie 3. Cortass proterred
&. Memeo) Gectestafeanyeretes tasadie under 1, Her 4. Foreign corpeeat.as| $. Qther corporation,
ee ee akeidbeswliuieiesswcbidsoci a ;
Total of columns 2, 3, 4, and 5.............. chindivekonkouheentie dado + tpeneccccarcsesecsccesseescerereslssessecerereccsccenvece
fee a holder of ie poration (attach stat De pivtisvbkedesednncee
otal (enter here and on line 4. page |) ........). :. Schedule : a i 159,293 63
Soi b D.—Separate Schedule D (Form 1120) should be used in reporting soles or exchanges of property. (Gee instruct n 9
Schedule E.—COMPENSATION OF OFFICERS (See page 5 of instructions)
1. Time Ge- | Percent of corporation
L Mame and address of officer ssleerssomend voted to Stochownes * 6. Amount of ¥. Gagenee omenee
T 7 CEE CRRReRIoEe aRRCER WEIR mae me seme -
/ i
Total compensation of officers (enter here and on line 12, page 1)........... 06sec eee ceveeee aiden 2.
Schedule F.—BAD DEBTS—RESERVE METHOD
¥ ,
2. Trade notes and accounts re-
Cor adie outs Landong
4. Gross amount added to
at ond of year reserve :
1. Seip on senses
6. Reserve for bad Cebdts at end
of year
/
rE (I Baas cabianciis die taastit cee Badd io aaa o oa Eee
,
Schedule G.—DEPRECIATION (See instruction 22)
This schedule is designed for taxpayers usirg +. a! eeatine —, and admiristrative procedures described in
62-21 as well as for those taxpayers who vish es authorized prion to the Revere P.
appeor use the first ng Aer Sin tad eeaatied oad he eden toadan erie dee aneaden
Revenue Procedure
rocedure. Where deuble
2. Gost or other basis | 3. Asset diiaia salmaaa 6 tenes ae
oon ene et oe Gules ees antes Liked Fak woe? wpasgend * ayes toneeat eee of tm ap © Copenaien tx
"(Description of property Cost oF otner wcaures | Geena hy so pres yous | Songun, | ei” -
4 ‘
1. Total additional first yer depreciation (do not include in items below)
TRO OeHOHE EEE EHH EH EEE EEEEEE EEE HEE EEE EEE EEEEEEEEEESD
| US. TREASURY DEPAZTMENT—INTERKAL REVENUE SEZVICE
'. rom 1054 APPLICATIO;: F°? AUTOUATIC EXTESION OF TWF 7O FILE US. Cor? ORATION
_ Rew. Fo. 1999 CGE TA. aETURN (SEC. 6231(b), UITERSAL ..cVESIUE-CODE OF 1654)
|
(See Instructions on reverse side)
For taxable year beginning ............ duly 1, 194 and ending 7 June 30, 000 19.65
PLEASE TYPE OR PRINT PLAINLY DO NOT WRITE IN
| Wome of corporaucn SPACE BELOW
If an exiexsion of time is =
necessory, file this form with Senel
IVAN ALLEN
the District Director of In- | pases COMPANY
ternal Revenue on or belore
the iSth day of the third
j BOX 1712
month following the close ot Car oF town, postal sone humber, State
the taxable year. °
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 6061 (d) of the Internal Revenue Code of 1954.
A remittance of dn amount not less than would be required as the first installment of the tax ly oi d to be due for the
taxable year shown above accompanies,this application.
1. Tentative amount of tox for the taxable year......... 66. cece cece receeecee $ 166,020.00
2. Less: Payments made on declaration of estimated tox... 0.0.06. eee ceeeeeeee s......46,020.00
BD, BRON GOD sec cccsccesvisessorcasccvsswocscccesccsoseccucen asvoeseses $....120,000.00
4. Amount of remitiance.....00 0.66 cece e cede cece ese eneenceeeeeeeeunees $ 60,000.00
SIGNATURE AND VERIFICATION
I declare under the penalties of perjury that I have been authorized by the above-named corporation to make this application and the.
to the best of my knowledge and belief the statements mdde herein are true and correct.
Pear enecese eee eneees §— eaneewesennesenererneers entee ereneeesesesenssase-sene PO OOO erecerenes serererecececerescseaesoereseresesesseees
(Signoture—see instructions) (Tide. df an ofi.cer of the corporation) ate)
I declare under the penc!ties of perjury that 1 am currently enrolled to practice before the Trea. ry Department and have been authorized
by the above-named corporaticn :o moke this application; and that to the best of my knowledge and belief the statements made herein are
true and correct. 4
A COPY OF THIS APPLICATION MUST BE FILED WITH THE TAXPAYER'S COMPLETED RE” URN
é
—-
SCHECULE D US. Treasury Departrert internat Revenue Service
(Form 112) | GAINS AND LOSSES FROLI°SALES OR EXCHAWGES OF property | 1964
Name and address
IVAN ALLEN COMPANY - ATLANTA, GEORGIA
PART I.—GAIN FROM DISPOSITION OF DEPRECIABLE PROPERTY UNDER SECTIONS 1245 #.ND 1250—Assets Held More
Than 6 Months-—Where double headings appear, use the first heading for section 1245 and the secon’ heading for section 1250.
. Cost or other basis, cost of
& Kind of property (it necessary, attac> statement of ® Date acquired ¢ Date ssid | 4 Gen ete . ak eapeoeenoun OF
descriptive detaris aot shown Deiow (me, day. yt.) (mo., Gay, yt.) | =
Ration) and expense of sale
“ES... NU, eee =
t. Depreciation allowed (oF ailowadle) sinc’ acquisition |
« schedule Ordena: goin,
January Decemder e es sum of nh] 1-2) yy ‘Sa = ae
——- amc ee Gueabains
Prior to January 1, 1964 After December 31, 1963
~ a
2. Total ordinary gain. Enter here and on line !! and identify as gain from Part! ......
3. Total other gain. Enter here and on line 4 and identify as gain from Part]... 0... oe cece cece cee
PART II.—SALE OR EXCHANGE OF PROPERTY UNDER SECTION 1231
@. Depreciation allowed! {Cast or other basis
& King of property (it necessary, attach statement |b Date acquired | ¢. Date sold | 4 Gross sates price | (OF allowable) mince | coal auberquentim: | ¢. Gain or loss
Of descriptive detais not shown delow) (mo, Gay, yt.) | (imo. day, yt.) contd | ghaned attach explana. (4 plus e less f)
Won) and expense cf sale
RE SOR RE Oeak oi:
eatin’ | 4
8. Total (If gain. enter on line 9: if loss. enter on line 11. Identify as gain or loss from Part I.).................... ‘
PART III.—CAPITAL ASSETS
Short-Term Copital Gains and Losses—Assets Held Not More Than 6 Months
WW cides piscine tala eimai aliinencteiiadaaiscanal chbda cast 5
Wiis tena onc ents igs ledge toieiuloaisAaleis tion Siva cc ecinesD be eaiiasanilibaiaangiaitns Rouhae-cltagubulatanss; Miviiesion tT!
2. ‘Qeund caged loss carryover tottcch danni. rte x stele sk WO A NUS Ua WSS a TRAD AL WEE aca uu er oee
8. Total of short term capital gains or .osses or ditterence between short-term nna gains cnd losses. eR <
Long-Term Capital Goins and Losses—Assets Held More Than 6 Months
‘O.. MR a ee ae Seen. ah
~~. O00s..0f Augheta......|....1958.. 6a |..2805.00..|.. }..23000.00 2,665.00
~-20..sh...van. Alen... Pee,
sewn lin MIM Soa Gx30-635 20-65. re 80. 1,375.76 | __ (7-96).
sececeiinccmasosis ial iit pei cg oS ARE DRE ee
10. Total prepa pau guins or ceeens or - ani sia long-term cavitel gcinsand losses................. 1,657.04
ITAL ASSETS
Wis slilitnieeiekiniciras B 4 : : sone
12. Total net goin for loss). Enter here and or line 1S... ...... ieee mine ei Pee ADEE eT
Schedule D (Form 1120) 1964
a
oo Page 2
PA. _J—TOTAL SCHEDULE D GAINS ANDLC 5S
13. Enter the excess of net short-term capital gain (line 8) over net long-term capital loss (line 10)............: Ae SE See Rt a Mee ee
14, Enter the excess of net long-term capital gain (line 10) over net short-term capital loss (line 8}............... meee ey
18, Net gain (loss) from property other than capital assets (line 12). 22.00 ccceccce ee.
16. Total lines 13, 14 and 15, enter here and on Form 1120. page: I, line 9... gio e ee ceeceee eee 1,657.04
Alternative Tax Computation
(Component members of controlled corporate group use Form 3920 to compute your tax)
AR a hearse tine, chia on, dict henan Ub , L ee ORR Te ee ee Se AL 083-82
18. Net long-term capital gain reduced by any net short-term capital loss (line 14)... 0.0... oo cc cececcceccccuee 1,657.0
22. Alternative tax (line 20 plus line 21).
If applicable, enter on line’3, Schedule J, Form 1120, and write “alt.” in
the margin to the right of the entry...... 2... 6.2... 0c eee ee cues
esx adiyatesaaad hana ieee Sis _—332.308. 70
INSTRUCTIONS
(References are to the Internal Revenue Code)
Gains and losses from sales or exchanges of capital assets
and other property.—Report sales or exchanges of capital assets
and sales or exchanges of property other than capital assets in
Schedule D. Every sale or e inge of property, even though no
gain or loss may be indicated, must be reported in detail.
Gains from section 1245 or 1250 property held more than 6
months (Part I).—(Report any gain from such property
held for 6 months or less in Part IV.) Except as provided
below section 1245 property means depreciable (a) personal prop-
erty (other than livestock) including intangible p | property;
(b) tangible real property (except for buildings and their structural
1
from sales or exchanges of capital assets shall be allowed
extent of gains from such sales orexchanges. However.
amount of a net capital loss sustained in any taxable year may
to each of the five succeeding taxable years (or
loss is attributable to a foreign expropriation loss
the ten succeeding taxable years). A net capital loss
treated in each such su ing taxable year as a
ay the — not —— as a deduction
any net capital gains any taxa year intervening
in —— the net capital loss was sus-
ich carried,
tal assets.—The term “capital assets”
the taxpayer (whether or not connected
SEEsSeR
nu
fs28 ra
feet
Fj g
:
il
Qe
see
£8
53
x0 the taxpa
sale to customers in the ordinar fn anaes oo
tra: business, of a
erat
ib
compositions, or similar
or any of its or of a State, or any political subdivision
of the District of Columbia, i on or after March 1,
1941, on a discount basis and payable without interest at a fixed
issue.
maturity date not exceeding | year from the date of
. involuntary
; see sections 1014, 1015, 1031. 1033, and 1091. re-
spectively. If the amount shown
cash cost of the property sold or exchanged, full details must be
he property.
—If any securities
yecr and ore capitc! assets.
of a taxpayer other
df
sale or exchange, on the last day of such taaakle yeor,
of capital assets. Section 165(g)(1). . :
Losses not allowable.—No loss is recognized for wash sales cf
stock or securities. Section 109).
No loss is allowed (except distributions in [:quidation) between
related persons. Sest.on 267.
(Instructi rt
|
d on reverse of duplicate)
components) if used as an integral part of manufacturing, produc
tion, or extraction, or of furnishing transportation, communications,
electrical energy, gas, water, or sewage disposal services, or used
as research or storage facility in connection with these activities;
and (c) elevators or escalators.
Except as provided below section 1250 penpete mecns de-
precicble real property (cther than section 1245 property).
See sections 1245(b) and 1250(d) for exceptions and limita-
tions involving: (a) disposition by git: (b) certain tax-tree trans-
actions; {c) like kind exchanges, involuntary conversions; and (d)
sales or exchanges to effectuate FCC policies and exchanges to
comply with S.E.C. orders.
Column f of Part I.—In computing depreciation allowed or
allowable for elevators or escalators enter in column {-1 deprecia-
tion prior to July 1, 1963, and in column f-2 depreciation after
June 30, 1963.
Column i of Part I, section 1250 property only.—If held for
more than 6 months, but not more than ! year, enter the smalier of
(1) column h. or
(2) column f-2.
If held for more than 1 year, enter, the result of multiplying the
smaller of
oy pee fo%e the of deprecia ed for
column {-2 less amount tion comput
same period using the straight line method,
by the percentage obta:ned by subtrecting from 100%. one per-
centage point for each full month the property was heid in excess
of 20 months. Where sub tial imp ts ve been
made within the preceding ten years, see section 1 250(t).
Gain on sales by a “ poration.—In the case of
@ sale or exchange, direct!y or indirectly, of property between an
individual and a corperation more than 80 percent in value of the
outstanding stock of which is owned by such individual. his spouse,
and his minor children and rrunor grandchildren, any gain Tecog-
nized to thé transferor from such sale or exchange shail be treated
@s gain from the sale or exchange of property which is neither a
capital asset nor property described in section 1231, if such prop-
ee oe is depreciabl- -nder section
167. Section 1239.
Installment sales.—If you sold personal property for more than
$1,000 or rec! property regasdless of amount, you may be eligible
to report any gain under the installment plen Wa) there is no pay-
ment in the year of scle. cr (2) the payments in the year of scale do
not exceed Loe of the seiling price. Section 483.
For treatment cf a pertion of payments as “unstated interact”
on deferred payment sales, see Section 483.
teallea’’
1¢—78387-1
Scnedule D Form 1120) 1965
a
Page 2
Pa... V.—TOTAL SCHEDULE D GAINS AND LOwsES
13. Enter the excess of net short-term capitc] gain (line 8) over net long-term capital loss (line 10)..............-
14. Enter the excess of net long-term capital gain (line 10) over net short-term capitol loss (line 8)............... 1,657.04
18. Net gain (iess) from property otrer thea capital assels fine 12)... 22... cccccccccccccccvcccccccscccccccecs
16. Totel lines 13.14. and 15. Enter here and on Form 1120, page 1. line 9.0.0.2... ee eeeees eee lessees: 1,657.04
‘ Alternative Tax Computation
(Comp t bers of controlled corporate group use Form 3320 to compute your tax) oe
ee, em ANNI TN CL RR DS hoa ss kg wk oc cn cack Gas nis andncscechbenacccaucuws 341,045. 82
18. Net long-term capital gain reduced by any net short-term capital loss (line 14)........ jhaeandeataerseapacy a
MeN igo eo ec sical vaya tia Dasoweihanas. Cenvbasces sienccanciene tes 339.3
20. If amount of line 19 is:
(a) Not over $25,0CO0—Ex.ter 22 percent of line 19.............--- gbushvincecankiwiuens
(b) Over $25,000—Enter 48 percent of line 19.2.2... ccc cccccccccccecccccccccccces
Subtract $6,500 and enter difference. cantrolled..-. “5000.00... seseeee 9.73906 61...
Oe aN NN ov ois Sa ss sa pcan dace tncere dns dacabvniwoncgucsesaedinas 414.26
22. Alternative x:x (line 20 plus line 21). If applicable, enter on line 3, Schedule J, Form 1220, and write “alt.” in
Oe a as ce 158,320.87
INSTRUCTIONS
(Refezences are to the Internal Revenue Code)
property, even though no
enn yb omen pa 5
between
toned cal an aes
Definition of cc:
peg
tal essets.—The term “capital assets”
the taxpayer (whether or not connecied
“its trade or business) but dagen oat taahons (1) stock in trace
be the taxpayer or other pr of a kind which would propezly
be included in the inventory of the taxpayer if on hand at the
the taxcbie yecr, or property held by the axpayer
..{ 07 8212° Customers in course of its trace
rty weed im the tr
chcracier wh.ch is sudject to tt iation
vided ir, secticn 167, or pol Sanpete used in the. trace or
iness of tne ‘taxpayer; or (3) certain copyrights, literary,
trade or business for services ren
Gescribed in (1) cbove; or (5) an obtigation ct i Gntea States
or ony of its ssions, or of Siaie, or oy political subdivision
thereof, or of the Discrict of Columbia oa or after Merch 1,
1941, on a ciscount dasis and peyable witnout interest at a fixed
matunty date rot exceeding 1 year izom the date of issue.
Basis.—in a ee Gain or loss for property acquired aiter
Febroany 28, 19i3, — —_ fy oie wos ocguired
by 1. cuniios conversion, or wosh
sale ©: stock. See sectors ioig. Pott ‘Osi. 1033, and 1C9i, re-
spectively. If the amoun: shown as the dasis is other than cciual
cosh cost of the prometiy scld or exchanged, iuli details must be
furnished regezcing the ccguisition of the property.
ities & i —If any securities
the texable year and. cre capital assets,
irom shell, in the case of a taxpayer other
" ined in section S31, considered as a loss
“swe GF excheage, oa the lest day cf such toxable year,
o —— cises. Section i65(¢){1).
Losses =0! allowable.—No loss is recognized for wash sales of
stock cr securities. Section 1091.
"No ios i3 chowed (ex distributions in liquidation) between
persons, Soction 267.
Gains from section 1245 or 1250 property held more than 6
months (Part I).—(Report any gain from such property
held for 6 months or less in Part IV.) Except as provi
below section 1245 property means depreciable (a) persona! prop-
erty (other than livestock) including intangible personal property;
(b) tangible real property (except for buildings and their structural
or if used a@san integral — of manufacturing, produc-
tion, or or of ft tion, communications,
electrical energy, . gas, water, or mee disposal services, or used
as a research or storage facility in connection with these activities;
and (c) ye or escalators
provided or "section 1250 rty means de-
preciable pea property (other than section 1245 property).
Sce sections 1245(b) and 1250(d) for exceptions and limita-
tions invol: (a) disposition it; (b) certain tax-free tra
WS St oe
sales or ifectuat FCC policies and exchanges to
compiy with Se oie
Coiurnn f of Part I.—In depreciation allowed or
cllowa cle ior elevators or escalators enter in column {-1 deprecia-
coal gt guage and in column {[-2 depreciation aiter
une
Column i of Part I, section 1250 property only.—It held for
more than 6 months, but not more than I year, enter the smaller of
(1) column h, or
ww column {-2.
held tor more than 1 year, enter the result of mult tiplying the
ani of
(1) columa h, or
(2) column {-2 less the amoun! of depreciation computed for
the same period using the Straigi ht line method,
the p g from 100%, one per-
centege point for ecch iu!l month the property was held in excess
of 20 months. Where substantial bongo have
mace within the preceding ten years, see section 1250(f).
Gain on saies by a “controlled” cor> —In the case of
@ sale or exchance, directly or indirectly, 0: property between aa
— and a corporation more than 50 percent in value of the
standing siock of which is owned by sch indivi his spouse,
oa ais minor children and en pl sandccniidren, any gain receg-
nized to the transferor from such or exchenge shall be treated
as gain from the sale or exchange of preex ty which is neither a
capital asset nor described in section 1231, if sucn prop-
ene on eenentee & Sepenctale under section
Installment sa!c3.—=: ou sold persona! ao
$1,0C0 or recl propesty Fesardiess of omour. me tire y be etig:
to report any gcir. Under te installment pian ea tesa ne
ment in the yecr o! sale, or (2) the payments in the year of sale =r
not exceed of the selling price. Section 453.
For treatment of a portion of payments as “unstated intere:t”’
on dei: ted payment sales, see section.483.
(Instructions sees on reverse of duplicate)
CLEARING HOUSE. INC., CHICAGO, NEW TORK. WASHINGTON.
65
COST OF GOODS MANUFACTURED
~ IVAN ALLEN COMPANY - ATLANTA, GEORGIA
Year ended June 30, 1965
Quick-
3 copy Printing
Inventory - materials, June 30, 1964 $ 3,97%.10 $ 68,702.95
Purchases - materials 2,499.84 523,110.08
Freight 7-55 32991
75 #62 49 595,004.07!
Less inventory - materials, June 30, 1965 498.3 65,1
MATERIALS USED
Direct labor
Manufacturing expenses:
Labor - indirect
Payroll taxes
Rent - building
- equipment
Heat, power and water
Depreciation, equipmer:t
Insurance
Taxes, general
Maintenance - equipment
Supplies - depar:=menta >
- litho
- letterpress
- composition
- cutting machines
- bindery “EB”
- plate making 7,292.79 7,732.01
- collator - 1,930.71
- rotary press - 940.48
- camera - 2,990.40
Outside services 2,207.38 23,741.80
Other . 2,047.90 1,800.97
TOTAL MANUFACTURING EXFENSE 3 29.555.08 $ 202.045.00
_$
TOTAL COST OF GOODS MANUFACTURED $252.592.77 $1,045,195 46
66
TAX SCHEDULE - 58-0136820
IVAN ALLEN COMPANY - ATLANTA, GEORGIA
Year ended June 30, 1965
DIVIDENDS
Xerox $ 5
3 M Company
Ivan Allen Company of Huntsville 2
Ivan Allen Company of Augusta 4
Ivan Allen Company of Athens, Tenn. 4
Southern Airways
Ivan Allen Company of Gainesville 5,8
1
14
11
J
\o
wy
uJ
ie)
38
QBS888ssAw /
Ivan Allen Company of Columbus
Ivan Allen Company of Rome
Ivan Allen Company of Macon
Ivan Allen Company of Greenville
i
OTHER INCOME
Discount’ earned $ 77,074.94
Sales tax compensation 214.52
Profit on special sales 6,557.19
Purchase charges to subsidiaries 92,440.76
$176 2 287 41
COMPENSATION OF OFFICERS
Compensation enses
Ivan E. Allen, Chairman 12,525.1 960.
W. H. Glenn, Jr., President 31,025.00 1,919.89
H. C. Jones, Exec. Vice-President 27,524.92 2,039.95
W. F. Floyd, Jr., Sec.-Treas. 21,224.92 706.47
J. H. Carnes, Vice-President 22,159.32 706. 30
W. D. Harris, Vice-President : 24,824.92 860.57
J. N. Murphy, Vice-President 17,024:92 3,423.05
$156,309.16
f :
ne > ee
TAX SCHEDULE - 58-0136820
IVAN ALLEN COMPANY - ATLANTA, GEORGIA
Year ended June 30, 1965
OTHER DEDUCTIONS
Travel and entertainment $ 54,895.25
Telephone and telegraph ‘33,932.67
Postage 18,116.77
‘Dues and subscriptions: 19,438.35
Sales promotion 4,968.15
Stationery and supplies 45,950.23
Heat, power and water 16,973.23
Truck 21,165.60
Amortization, leaseholds 3,267.00
Insurance 23,581.98
\ Employees welfare 3,922.68
\ Administrative charges to subsidiaries (56,100.00)
\Legal and professional 10,629.13
Credits and collections 1,702.68
Bank charges 685.42
Contract services 12,778.30
Directors fees 1,700.00
Rent commissions 2,875.08
Pensions 2,808.60
Miscellaneous 20 ,822.82
$244,113.94
QUESTION I (1) FEDERAL RETURN
Ivan Allen Company of Albeny, Ga. 96.00%
Ivan Allen Company of Athens, Ga. 100.00
Ivan Allen Co. of Athens, Tern. -67
Ivan Allen Co. of Augusta, Ga. -67
Ivan Allien Co. of Chattanooga, Tenn. 100.00
Ivan Allen Co. of Columbus, Ga. 67
Ivan Allén Co. of Gainesville, Ga. 90.00
Ivan Alleh Co. of Greenville, S. C. 60.00
Ivan Allen Co. of Huntsville, Ala. 100.90
Ivan Allen\ Co. of Macon, Ga. 66.67
Ivan Allen\Co. of Rome, Ge. 96.7
ose - ace
68
TAX SCHEDULE - 58-0136820
IVAN ALLEN COMPANY - ATLANTA, GEORGIA
Year ended June 30, 1965
TAXES
City, state and county $43, 323.82
Intangibles 1,643.19
Domestic corporation 1,000.00
Corporation registration 2.00
Business licenses 943.00
Automobile and truck 229.50 6,896.58
Pay roll 49,755.07 $ 96,896.5
Less taxes charged to cost of sales 13,854.32
GEORGIA 3,042.
Georgia income tax - current years $17,683.57
- prior years 2,676.50 20,360.07
$103 2 402. 33
CONTRIBUTIONS :
Atlanta Humane Society $
Georgia Cumberland Conference
Exchange Club
Oglethorpe Boucters Club
Marion Howard School
Junior League
Florence Crittenton School
Enpty Stocking Fund.
Buckhead Lions (lub
North Fulton Fine Arts Foundation
Christian City
Salvation Army
Allen Foundation:
Cash $10,000.00
100 shares Xerox Corporation - cost 2-24-61 $641.98,
fair market value 1-29-65 10,800.00 20,800.00
$ 22,261.45
1,659.10
~
in
ZuaSyse
=
S8RsS
883883838s8E8888
Less contributions carryover - federal
CONTRIBUTIONS - FEDERAL $ 20,602. 38
69
TAX SCHEDULE - 58-0136820
IVAN ALLEN COMPANY - ATLANTA, GEORGIA
Year ended June 30, 1965
BALANCE SHEETS
6-30-64 6-30-65
Other investments:
Marketable securities \ $161,428.56 $154,222.25
Investments in subsidiaries _ 318,525.55 351,141.38
$479,954.11 $505,363.62
Other assets:
Cash value of life insurance . $162,645.52 $176,864.5¢
Prepaid expenses 39,695.35 28,811.61
Leasehold improvements - net 23,096.13 19,829.13
\
437.00 $225,505.33
Other current liabilities:
Income taxes $180,752.36 $151,521.21
Other taxes 76,274.09 89,819.67
Accrued salaries and weges 10,037.53 16,557.54
Accrued interest 432.67 41k. 69
Accrued profit sharing pension contribution 59,257.06 59,786.76
£6,753. 8,099.
70
STATEMENT OF RETAINED EARNINGS
IVAN ALLEN COMPANY - ATLANTA, GEORGIA
Year ended June 30, 1965
Retained earnings, June 30, 1954 $1,997,242.28
Add:
Net income for the year ended June 30, 1965 232,584.98
Excess of fair market value over cost of
100 shares Xerox Corp. stock donated to
Allen Foundation:
Fair market value 1-29-65 $10,800.00
Cost 641.98 10,158.02
Reverue Agent's adjustments for F.Y.E.
6-30-63 and 6-30-64:
Capitalization of essets previously
charged to expense $43,696.22
Reduction in sllowable depreciation 685.58
Reversal of accrual of contribution to ’
Allen Foundation not timely paid 7,500.00 51,881.70 294 624.70
$2,291, 866.98
Deduct:
Prior years' income taxes:
_ Federal $33,496.07
Georgia 2,676.50 $ 36,172.57
Dividends paid:
Cesh $48,955.30
870 shares Xerox Co. stock - at cost 6,564.34 55,509.64 91,682.21
RETA1..ED EARNINGS - JUNE 30, 1965 $2,200,184.77
i hy
71
STATEMENT OF PROPERTY PLANT AND EQUIPMENT
IVAN ALLEN COMPANY - ATLANTA, GEORGIA
Year ended June 30, 1965
bY ate cree
4 a Uf, . teats cae
fr KE 2, /. auld 6 oer up
La
, /
, (4
- FEL 6. ee
/ te, we “ae ais
ses ye PP pane vo, /7as
2
Ser See seers Sess rc set seser sees seecs
Fr e444
Fit Pt we
=== + +4
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 $ ono - $ - $ - $ 35,250.00
1740 Peachtree St. 120 ,000.00 - 120,000.00 o - “ _ 120,000.00
221 Ivy Sst. 74,000.00(C) 76,000. 500 - 150,000.00 - @ - o 150,000.00
660 Forrest Road 72,000.00 - - 72,000.00 - - - a 72,000.00
Buildings:
972 Mariette st. L.
1948 - 34 81 997-69 - - 81,997.69 39,768.85 2,459.93 - 42,228.78 39,768.91
Improvements:
Sprinkler - 1948 - 5% . 9,937.00 - - 9,937.00 7,436.16 496.85 - 7,933.01 2,003.99
Roof - 1955 - 10% 4,097.84 - =. 4,097.84 3,892.91 204.93 - 4,097.84 -
1740 Peachtree St.:
1959 - 5% - (A) 183,078.48 Ps - 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 o/ . 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 ats 6,876.63 2,123.37
221 Ivy St.: '
1960 - 44 177,012.25(C) (76,000.00) - 101,012.25 24,781.72 spe 6,300.84 22,521.37 78,490.88
1963 addition - 44% 428,754.03(C) 16,011.11 ~ 4d, 765.16 25,725.24 17,790.61(c) (1,189.02 4h, 704.87 400,060.27
1963 roof - 5% - (c) 8,156.00 - 8,156.00 - 407.80(C (407. 80 815.60 7,340.40
1963 waterproofing and eS :
sign 20% - (Cc) 9,190.54 “* 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 00.00 124,558.94 EAE 95 S, 227. 5 ne 1330- 99
2 3 95 a 3 bye 5 $ red 2 2 36
Furniture and fixtures:
Store - 1961-2 25% (A) $. 2h9.2k $ - $ - $ 249.2h $ .i1gh.12.$ 31:98 - $ 155.40 $ 93.84
- 1962-3 25% * 161.41 - ~ 161.41 55.49 26.48 - 1.97
Plant - 1958 20% (A §36e-T8 - - 3,562.74 2,722.18 -
Office - 1956 20% (A 4,736.12 - - 4,736.12 4,020.98 va
= 1957 -20% (A 88 : 388. 314.82
- 1959 204 (A 10,746.29 - 1,955.50 2,790.79 8,210.92
- 1961 20% (A 3,675.00 - 3,675.00 1,981. 56
~ 1962 25% (A 1,673.01 - - 1,673.01 833.13
- 1964 254% c 3,960.00 - - 3,960.00 495.00
- 1965 25% (B - 7,439. - 7,439.50
71526 °
72
STATEMENT OF PORPERTY PLANT AND EQIUPMENT - CONTINUED
IVAN ALLEN COMPANY - ATLANTA, GEORGIA
Year ended June 30, 1965 ' ' I
.
oo
2
| ag Assets Allowance for depreciation Cost less
Phage a Pg ‘ Pa mir Balence depreciatione
.30, po -30, in. 30,1964 Provision Disposals Jun. 30,1965 Jun. 30,1965
jutomobiles and trucks: sete .
| *ig6l Paton - 66 2/36 (A) $ 1,606.78 $ 4 $ 1,606.78 $1,4
1961 Falcon - 66 2/34 (A 1,606. - - p06. 1,472.68 $ 89.25 - 1,562.
1962 Chevrolet - 2 2/3% (A) 3,471.22 - - 3,471.22 2,699.84 514.50 , - , tA ’ Pag
1964 Oldsmobile - 33 1/3% | 3,114.68 - - 3,114.68 1,048.22 1,028.22 « 2,076. bi 1,038. 2h
1964 Chevrolet - 33 1/3% 2,999.11 - - + 2,999.11 498.18 999.70 - 1,497.88 1,501.23
1964 Cadillac 5,706.21 - 5 4706.21 - 951.03 - 951.03 ‘ ona
1964 Ford Mustea 3,281.24 - 3,261.24 - 546.82 - 546.82 ‘* ‘
1965 Cadillac - 33 1/3% - 6,581.09 , = 6,581.09 - 2,193.70 - 2,193.70 4,387.39
| Sede Gaui soe ~ 908 ( ‘-atn.23 <a 7 oe g3°T-
1 G.M.C. truck - ’ A , . “0s i ’ wd 3,5 5.77 88.67 - ‘
| 1962 Ford van 1,695.30 - 1, 695.30 - 17554.03 hie ganas 8.67
: = ~~ ieee 1,917.35 1,917.35 065
2/3% (A 9917-35: - - sJi le 1,065.19 . 568.20 -. 1,633.
1964 G.M.C. truck - 33 1/3% 5,815.29 - - 5,815.29 1,938.23 1,938.23 - 4876, iG 1 a.
Pian pode Sl ill ES sczoepee 1 A cosa - 654.03 - "654.03 1,308.07
1962 Chevrolet panel - 66 2/3% (A) 2,230.61 - - 2,230.61 1,735-41 330.10 - 2,065.51 165.10
1962 Chevrolet S.W. 2,330.31 ° 2,330.31 ~ 2,136.13 - 2,136.13 - -
1964 Chevrolet S.W. wad 33 1/3% J 2,457.03 i & oa 2,457.03 409.47 849.01 = 1,258.48 1 198 55
pars go wege de on tee sil on : 2 7A
_ 1962 Ford van 66 2/34 (A) | 1,476.2 - ad 7470. 9353-19 82.00 ' - 1,435.
1962 Ford van 66 2/3% (A 1433.31 - - 1,433.31 1,313.87 79.50 - 1958.97 eo
1962 Chevrolet stake - 66 2/3% (A) 1,772.89 - - 1,772. 1,379.30 262.25 - 1,641.55 131.34
1962 Corvan | 2,253.05 - 2,253.05 - 2,065.31 - 2,065.31 ‘> és
1962 Chevrolet panel - 66 2/3% 2062.21 - 2,062.21 ' ~ 1,604.39 - 1,604.39 ee ra
1962 Chevrolet panel - 66 2/3% 1,682.13 - oer 1,682.13 1,308.70 248.85 va 1,557.55 124.58
1963 Ford van - 66 2/34 (A) 2,012.33. ‘ .- - 2,012.38 1,565.63 298.00 - 1,363.63 148.75
1964 Chevrolet panel ~ 33 1/3% 1,868.96 - - 1,868. 311.55 623.00 « 934.55 934.41
1964 Ford van - 33 1/3% © 2,054.75 - 2,054.75 - 342.45 - 342.45 1,712.30
1965 Chevrolet panel - 33 1/3% - 2,358.31 - 2,358.31 - 373.05 - 373.05 1,985.26
1965 Chevrolet panel - 33 1/3% + 2,168.93 - 2,168.93 - 361.50 - 361.50 1,807.43
1965 Chevrolet panel - 33 1/3% - . 1,636.34 ° 1,836.34 . 306.06 - 306.06 1,530.28
Quick -Copy depa:rtment : . é
1965 Ford - 33 1/3% 92-00 1,160.00
/ p { —
ON arate eee
STATEMENT OF PROPERTY PLANT AND EQUIPMENT =-CONTINUED
=.
IVAN ALLEN COMPANY - ATLANTA, GEORGIA
Year ended June 30, 1965
on pees "
Assets Allowance for depreciation Cost less
Balance Balance Balance Balance depreciation
Hl Jun. 30,1964 Additions Disposals Jun. 30,1965 » Jun. 30,1964 Provision Disposals Jun.30,1965 . Jun.30,1965
potasey and equipment:
inting plant:
, 6 1/44:
> 19h6 $ 295.00 $ - $ 295.00 $ - $ 285.82 $ 9.18 $ 295.00 $ tee -
} 19h7 11,899.60 - - 11,899.60 11,699.60 - - 11,699.60 200.00
} -19h7 29,000.00 -. - 29,000.00 28,500.00 - _ 28 ,500.00 500.00
gh 7,200.00 - 7,200.00 - 7,038.00 162.00 7,200.00 - -
/ 1950 455.00 = = 455.00 412.38 28.44 - 440,82 14.18
worn) 12,875.20 - - 12,875.20 10,863.45 804.70 - 11,668.15 1,207.05
:
1954 42,135.00 ~ - 42,135.00 37,836.99 859.60 - 38,696.59 3,438.41
1956 16,600.00 - - 16, 600.00 14,093.38 501.32 - 14,59h. 70 2,005.30
1957 3,858.00 - - 3,858. 00 3,129.82 145.64 - 3,275.46 582.54
| 1958 26,527. 99 - - 26,527.99 20, 269.2 : io 75 - 21,520.99 5,007.00
| 1961 10,225.00 - 10,225.00 4,335.40 7-92 5,513.32 711.68
| 1963 35,550.18(C) 6 1838. 47 - 42,388.65 8,756.79 67313. 42(c)(1,914. 77) 17,014.98 25,373.67
' 1964 38, 14.50 - 38,414.50 5,641.45 6,554.61 12,196.06 26,218. 44
1965 - (B) - 9,012. -50 - 9,012.50 - 1,362.14 - 1,362.14 7,650.36
EF i department:
~. - ne \
i 2,687.18 - - 2,687.18 2,179.99 101.44 - 2,281.43 405.75
| se 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 ee 2,856.74 - ~ 2 +856 74 182.74 - 2
FU Tan-BL GIS B50.97 $7,095.00 8 253,080.78
ia
$1,761 ,833=20__ $78,501.64 32,778.82 $1,807,555.92
Additional first year depreciation taken on first $10,000.00.
3 Declining balance method
R.A.R. adjustments
85,614.8
21,941.
Se oS
- COPY BOUND CLOSE IN CENTER
75
\
on 1120 (19€4) Pace 3
Schedule I.——-SPECIAL DEDUCTIONS
(Small busi : ’ ‘ panies and bers off affiliated groups not filing a consolidated return—see instructions)
Dividends-received: (a) 85 percent of column 2, Schedule Co-+ +++ eee eeeeeee ese neeeceeeeee a ererirerit tis) 50,399.59.
(b) 61:2 percent of cclumn 3, Schedule ¢C (cee instructions for fiscal year) ........ 62... eee ecb ceeeeceececeeennceenecee
() 85 t of dividends received from™ certain foreign corporations....................5
Total dividend rink gs ey (sur of lines Too), (bd, annd (c) but not to exceed 85 percent of the excess of line
28, page | over line 4,of this schedule). (The 85-perce’ent limitation does not apply to a year in which a net
ESOS, ROR Oey. yp eet enn eee ey LUTTE ee ee PLT ee Cee TTC TES Te Cer Cee eee 50.,399..59..
Dividends paid on certain preferred stock of public utilities (see® instructicns in case of net operating loss or fiscal year) «| _o........e ee eeeeeees
Western Hemisphere trade corporations (not allowable in ye®t of net operating loss—see inst. for fiscal year)..... i sshcajuindilsioeeasas
Total special deductions—Add lines 2, 3, and 4. Enter herd Gnd on line 2%b), page 1............ Seer, 50,399.59
, SCHEDULE jJ.—TAX COMPUTATION
/ (Component ial trolled co®rporate group use Form 3920 to compute your tax)
f. » Taxable income (line 30, page 1)....... 22.2.2 ccc tt ttt tet e ee tees owéshens pikbasuans shane anue is soesinaaacinicanitabaniibis
. If amount of line 1 is:
ee ES Ge Ee TEST Tete eer TTT re ee ee eee eo
(b) Over $25,000—Enter 50 percent of line 1... 2... ccc e eee c ee eeeee sees cee pbvad ee ;
Subtract $7,000 and enter difference............e0¢t ctr tt ect e terre eens 7 OO I bins
Income tax (line 2, or line 22 of separate Schedule D, whicthever is lesser, or fiscal year tax computation) Siekee ee 61,4 10. 59.
Foreign tax credit (attach Form 1118)...................
Balance (line 3 less line 4)....... cic ehatebesewwhuaenes
Investment credit (attach Form 3468)...........-........
Balance of income tax (line 5 less line 6)................
Tax under section 541 of the Internal Revenue Code (from gSchedule SEER si hEs bc EERE a wkbas Rohen hohe a
Tax from recomputing prior year investment credit (attach ‘ statement) heh ENDO Odd ME Oh Peake ee ehh bes babhbhhew
}. Total taz—Add lines 7, 8, and 9, Enter here and on ling®_3!. page 1....................................- 160, 338.95
: (Fiscal year tax putati hedulde for t pay with t ble i over $25,000)
T faxable income (line 30, page .)................ a Os Oey i ey Ce Cure als pu el enetnper
+ 3 percent of line 1........... RUS be be as oc Pee wewmecsu Ty USE t et Cee we Rese eee ahs
+ Subtract $7,000 and enter difference. ............... ccc ttt ttn tenets eee ence eee 7,000.00
MD ONIN EAN Bio eas os Sess Ukic oe eS nk we Fe PARA N ON Ra vee awe eines
Subtract $6,500 and enter difference... 0.6... ee ete ete eens 6,500.00
Amount on line 2 or alternative tax (separate Schedule D) mnultiplied by the number of days in the taxable year
prior to January 1, 1965, divided by the total number of d@aysan the taxable year... 26... eee eee ee fee 82,980.79.
Amount on line 3 or alternative tax (separate Schedule multiplied by the number of days in the taxable year
' after December 31, 1964, divided by the total number of adays in the taxable year... 2.6... 0s sees sees eee ranean
Income tax—Add lines 4 and 5. Enter here and on line 3, Schedule J» 161,490.59
\ Date incorporated ................--- 12-5-02 eer | ™. Did you by cone = deduction for expenses tonnected with:
+ (1) Did the corporation at the end of the taxable year own df pote. © Penni bn oy ferenonrm pomp abuey geen
po pr ohare ipane 50 percent or more of the voting stoce similar facility (J? (Other than where the operation cf the
Poa a estic corporation?.....%...... Yes &} No [' facility was the principal business.) Yes (1) No &
1) Moialion af the end of the lossole yesrowen anrecly oe FP Fen ge ae moe ype ge
=. 50 percent or more of the corperation’s a used by customers or employees or bers of their tamilies?
(For rules of attribution. see section 267 (o) 2 . (Cther than use by employees while in business travei status.)
If the answer to (1) or (2) is “Yes,” attach separatite Yes No §)
schedule showing: : (3) The attendance of your employees’ families at con-
pao ty rye se and tara identification no?“ — 4 es meetings? Yes () a See
tcentage ow i cat Fr empleo ne . ir for f
= caswer to ) at sve i Bh mag Ly pope (Other han euanna susan = Form W-2) 5 * ‘oO "No &
or .0ss) trom line 3 & rm il2 — 5
corporation for the tania pues satin with or withit!® ~ — > cor —— ~_ a > office tfitter
your toxable year. incipal business activity OFLA ce outiitt 27ers.
Did you have any centracts or subcontracts subject to t ° yrncent sient sagathave Soeabenu Ce Ey
— . Were you a memrer of a controlled grounm subject to the pro-
ee Wee tee oe, .....YesQ No visions of section 1S61? Yes &. or section i362?
“Yes,” see inst.K. Enter amour! here _.......... Re es io
ss neat hee a If so. check tyre of relationship: 1. parent-subs:t:ary “4
i Did you ct er | time during the year own directly o- irsirectl tt 2. brother sister (: combination ef (1) and (2) 5 (ae
any siock cl a fcreign corporation?........¥ es CO No section 1563).
if “Yes,” attach statement as required by instructicn N. P. renee in 1S€3 a a cf a controlied group
Arsutt of ificome (or iccs) for: 1961... 427,727.91: he It a ces vx “ae wed aa mod. Pat | eto?
1962... 374,224.60. 1953. 437.962, 770! Yes ()_No
76
Forva_ 1129 (1964) ‘4
ee Schedule L.—BALANCE SHFETS (See Instructions) mice
Beg:rn.nz cf taxatie year End of taxable year
ASSETS (A) Amount Pele eee (C) Amount (0) Total
ARG TARR eS a es RE RT from toa CAE . kOL, 11b 209 -. 342,72 » 5
2. Notes and accounts receivable.............:eeeeeeeeeees 674, 774.7 776,084.23
(c) Less: Reserve for bod debts. ............2.0ee0005- 674,774.73 776,084.23
es I 6 i550 ae KGS i sad es UR bean cccekebaeesad 5465 537.8) 509, 21.4..25
ic Sn Rk De I iuinesccseucentel. oo ae ee ee re
ae ae A I I ss a cccuaniccn
6. Loans to stockholders..............0+5 eéOiaen coucuacces RETA tear NEE
7. Other investments (attach schedule). .............2ss000. Scum ad 479,.954.1 om 505,363.62
8. Buildings and other fixed depreciable assets............. 1 , 4609, 593.16 1,430,305.9
Ge) Rem Dactniduted auudtuaten ond deguectal W2h, 751. 320,035,831. 78 485,614.89 944,691.09
©, Daphetabln angie .ns > vencssqreecssssecssapescecasestne
(a) Less: Accumulated depletion. ...................- :
10. Land (net of any amortization)............cssesseeeeeeee 301,250.00 3712250.
11. Intangible assets (amortizable only)........-....s0.00005 eisai
EES TEE SACRE MRT IME nr i.
12, Other ossets (atfach schedule)............0sccesceseeeee 225,437.00 225,505.33
13. pn Ry IIR eat mee geet ges cone peepee 3. 717,835.18
LIABILITIES AND CAPITAL
14. Accounts payable............. Mpths cscbcec she boxupasey 560,636.95 60,409.29
25. Mesiguges, sales, and hands pagable tn less thon 1 your. 14,125.39 2 dh 922.11
16. Other current liabilities (attach schedule)................ 326,753.71 316.099.
17. Loans from stockholders........-...-.-scesecesececeeees Weis FR
18. Mortgages,-notes, and bends payable in | year or more.... 305,787.59 290 , 865.18
12. Other liabilities (attach schedule)................eeeeees Sree ee
20. Capital stock: (a) Preferred stock. «........ 5. oo sn ccc s fonseccenpeonpeqzeccenss
OU i ie: 376,860.00! 376,860.00 376.860.00 376,860.00
21. Pcid-in or capital surplus (attach reconciliation) ......... . UN | yepeeecamaas as 56,493.64
22. Surplus Tesrerve (attach schedule) ee AC SEU ea Cage Fee Roe eS eee
22. Earned suxplus end undivided protits...............00008 2297,242, 28 2.200, 151.7)
24. Total liabilities and copital....................... B 637,899.52 3,717, 035-1
ITEMIZED ENTRIES MADE BELOW MUST BE IDENTIFI=D BY ACCOUNT
Schedule M-1.—RECONCILIATION OF INCOME PER BOOKS WITH INCOME PER RETURN
1. Net income per books..........sc.seeeeeeres 2325584 28] 7. Income recorded on books this year not in-
ee Ce oer ne te L.-LOAaAALaOG! chudled in Gils cotern (emis) ...................4
3. Excess of capital losses over capital gains. ... ancfease in C.S.V..life J
4. Taxable income not recorded on books this -lnusurance..in excess.of.......
year (itemize) ' cast ] 7223 25
8. Deductions in this tax return not charged
against book income this year (itemize)_......]
S. Expenses recorded on books this year not de- -Prior..years state. income ......|
ducted in this return (itemize)... eEXCeSs......] taxes
contributions. 2,676.50
1,659.10] 9, Total of lines 7 and 8.............-.| 3,599.75
6. Total of lines 1 through 5............- 395,345.16] 10. Income (line 28, page 1)—line 6 less 9..... 391,445.41
Schedule M-2.—ANALYSIS OF EARNED SURPLUS AND UNDIVIDED PROFITS PER BOOKS (line 23, page 4)
1. Balance at beginning of year.............. S. Distributions: (a) Cash SAE oh eC
2. Net income per books. ...........2...eeeeees Bore EE TOT nena ee Me eae a
3. Other increases (itemize) ........---..-.ce--0----- (c) Property ...........005| Ree oe taiedioerine
6. Other decreases (itemize)..........-.-..-----.---
| A Tote! 4 tins S end ©. o.oo ck ss -_———--
4. Total of liner 1 2. 0nd 3.............. | @. Ealsacos 73 cf ycar Mine 4 less 7).........1 Schedule
2 US COvOR MENT Prot
VAG her 8 ed PLS -R gd
77
rom ZO5O0 STATEMENT I SUPPORT — DEDUCTIO:!
Rev. July 1962) For Payments to an Employees’ Pension, Profit-Sharing, Stock Bonus
Seventinenasibucens Trust or Annuity Plan and Compensation Under a Deferred-Payment Plan
Name and address Employer taxable yecr ended
June 30, 1965
IVAN ALLEN COMPANY - ATLANTA, GEORGIA Employer identification No.
: 580136820
PART I.—DEDUCTION CLAIMED UNDER SECTION 404(a)(1), (2), (3), or (7)
1. Name of plan:
Profit sharing pension plan of Ivan Allen Company and subsidiaries
2. Type of plan: 3. If a favorable determination letter has been received indicating
—- qualifies under section 401 of the Code, give date of
DO Pension or annuity Gd Profit-sharing [) Stock bonus recent determination letter
muy. 17,..1956
4. Medium of funding: (Check each applicable box) Gi Meitiadinh oon
Group contract:
ta) Trusteed plan: _ LD Deposit administration
C1 Individual annuity contracts 0 Deferred annuity
& Individual contracts containing life insurance © Group permanent
DD Self-administered (0 Individual annuity contract
1 Other (Specify) C) Other (Specify)
5. Total number of employees as of the close of the year for each of the following groups based on reasonable estimates:
(a) Employees ineligible b of requi ts as to:
(iv) Minimum age and not included in (i) through
(i) Temporary, seasonal, part-time..... -.....-..--...-.7------- (iii). . Skee eeuetnan
(ii) Job classification and not inch ode 4 (v) iene 5 poy y (Solely) .. FETE e Reet enemnnmerenaneennenennee
in (i) (e.g., hourly paid, elc.) < eenecececececeneteeeeeee | (vi) Other and not included in oO through (v)
ad of service and not included (Specify)
oS "see ae 197
(vii) Totals ((i) through (vi))...............08
(b) Employees eligible for coverage but not covered by plan ...........2-cccecceccceeeceeereeeseeteeeeceeeres pa RL nc rae ey
ee I I aaa desc we a a Sk a pane oa sco op ude soup CRd boon bine tune cecesaees DSS SRR
(a) Total of all employees (lines (a) (vii), (b), and (¢))....... Sila oi eduticuaane AiWe< cass aeons a.
(e) If you claim that the requirements of section 401 (a)(3)(A) are satisfied, check here J and attach necessary data
and computation to substantiate.
6. In the case of:
(a) Trust—Attach a detailed balance sheet and a detailed statement of 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 kinds of premium refunds or similer
credits made available and the disposition of such credits.
(c) Pension or Annuity Plan—For each yar a summary of the costs or liabilities and adjustments under the plan based on the applica-
tion of the methods, factors, and assumptions used under the plan must be submitted in sufficient detail to permit ready verifi-
cation of the reasonableness thereof.
1. (a) Total nondeferred compensation paid or accrued for all employees under the plan..........0.2.ccseeeeeeees $1,295 ,802. 54
(b) Total nondeferred ccmpensction _ GI OE WN INN 56 i's oe CANS ck oy sh caine cs keen hc ncuses $2.125.113,82
(c) Total amount of contributions al
ated for the kenefit of e a. former or retired em-
. or their beneficiaries (including any insurance provi thereby or directly related
EET SEE Ree SRE ee ata EE Na OREN AN Te hel a ae nae: - $ o
(@) If a profit-sharing or stock bonus plan: (i) Amount originally allocated in the year. .............2ceeeeeeevee $s 74,786.78
(ii) Amount reailocated in the year (focfeitures)........ 2... . eee ee eee S$. 10.9633)
8. Determination of total contributions subject to limitctions:
(a) Contributions by the employer during taxable year (from schedule A, Part II) .....0 20... .ceccccceeee ‘.. ees. 786.78
(b) Contribution carryover from previous years (from schedule B, Part II)... 0.0.00... ccccececuveceveces $
(c) Total contributions subject to limitations ((a) plus (b)).. 00... cece ce eee cecccceucuceceeeces aes PURO 74. 3196. 78
(d) (i) Total amount deductible without regard to section 404(a)(7) (lesser of (c) or applicable Imitations). $ Th, 1786. 78
ep coenrnen wa eens waen Ol Gals HENS ok ka ek acs eee we $
78
rug «z
9. Statement required with respect to each cf the 25 highest-paid employees covered by the plan OR participating stockholder employers
who own more than 5 percent cf the ‘ng stock and who cre amung the 25 highest pai’ = .ichever is app (See )
EMPLO Percent of | Are Principal Sai
(The letiers jab tain Sxcunine onion ‘an Cicer ""Onmed oe = oer
in the following sections of the form) eo LS (years)
(a) Yes | No (2) _Yes |_No (e) ®
a |Ivan.Allen,..Sr. X 31.20 |X 187 64
sp | Ivan Allen, Jr. X.|....45.46 | xX 1911 34
C |.W._H. Glenn, Jr x 6.441 X 1913 14
D
E
F
a
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I
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N
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P
Q ie
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8 |
7
Uu
v
w
es EEE aa ES ASCE OH IEE RIO ORENES, Os ts, AMEN
Y
| Amount Allocated for tihe Benefit of the Employee or Benefici
NONDEFERRED COMPENSATION (Unclude any insusance — thereby or dizectly
a related thereto), less Emp
If ee om or Stock
Under Each Benes Men
Basic Compen- Other Plan
sationand | ther Direct | Other Than TOTAL | of Delerred | Under This | Amount ee
sation in the — ts tao Year
eee oy w ae my —— (n)
T aw |.22:525 12,525 ventteeoe| Ly Z33044.....1,060. 311.....273.23
Ot hsieee ho 15,925 »....1.1,116. oi eoseee BOT UU... 228.59...
e© |.31,025 31,025 9721.08 772.1 198.85
ole SAEED NRE TROIS ACE! ERE CRRA ARO MEE SET eT cere.
E
Fr
Oe Beles lenibeon cineshal ssoucaniondabwsistcolnaRucpaclosncananbees ger,
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AE ELE ERG AOEIDCR NAL KAREN CRA aR Smee ees
Ge VAR RD Uschi AlN MORE SCI: MDa me nee Sh
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SECM, MO Cue * EISNER Mane AU en Sen, “eecas
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Ge, DORRE SERS: BEERS as Dem SEIS MRSC MIE TSR LAPEER! fe OO EAD
gs MEE DE BE: ene ENC Rabon Ripeneare knetre Hae. CS Tie
GREER NICS SACRE MAME WN een raIen
hg OE ORES LEA RON Senta Relate hn Ceo
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TU Mestalgnsichs antares nD ed hccncncasihncs sscdciccsobees Aeihcbiaidh" eliedalpniiee wens
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79
TAX SCHEDJLE - 58-0136820
IVAN ALLEN COMPANY - ATLANTA, GEORGIA
Year ended June 30, 1965
FORM 2950 - PART I SEC. 7 (da) (i)
Charged to Credited to
expense employees
Ivan Allen Company - Atlanta, Ga. $60,000.00 $ 75,454.59
- Albany, Ga. 841.34 1,058.05
- Athens, Tenn. 795.23 1,000.07
- Augusta, Ga. 1,365.73 » Bit p ty gf E
- Chattanooga, Tenn.. 1,140.99 1,434.89
- Columbus, Ga. TT2.19 971.08
= Gainesville, Ge. 1,434.88 1,604.47
- Greenville, S. C. 3,641.95 4,580.04
- Huntsville, Ala. 731.85 920.35
- Macon, Ga. 2,091.82 2,630.61
- Rome, Ga. 1,970.80 2,479.43
$74,756.75 $ 94,050. “VP
Forfeitures 19,263. 31
$94,050.09 $ 94,050.09
TRUST FUND BALANCE SHEET
ASSETS
Cash and due from employer $ 81,629.85 -
Securities (at cost) 748,248.86
Accrued income 3,854.92
$833,733.63
LIABILITIES eee
Insurance premiums payable < $ 18,265.20
Allocated to members . 815,468.43
$833,733.63
___ (RUST _FUND Ii:COME :
Enployer contribution $ 74,786.78
Dividends and interest received 29,034.18
Insurance refunds 2,706.52
Deduct:
Loss on sale of securities $ 280.14
Insurance premiums paid 19,574.88
Benefits to members 15,949.01 35,804.03
$70,723.45
eee ee ee Pe Peet Ne Pe ee
80
as
Totat |.28 572... 58,575 > 20.55) _..2s719.94.__..790.61..
a4 IF PENSION OR ANNUITY FLAN
CONTRIBUTIONS | Retirement | Expected Date of Form of Retirement or of oe
Benefit ~ -| Under the Plan
re) es os eS @) @) ©
A
B
c
D :
E
Fr
o
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R
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Ne eee eee eee eee eee ee ccmeaciRERRGA® GERMS REIS
R
B
, sep TER
u
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w
x
OR BEBE Serene Caneee a8 sence SRE 557
PW NNO eid [EY | SE te he
. 10. Have you attached copies of the following which you are required to submit for the first taxable 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 Tes | NO
a. Verified copies of all instruments constituting the plan. in- © A pemmery of Bo prowtstins ond rie a
fy = Fy oe (1) Employee eligi ts for in the
a brest f ond a re dwtclied de — x
cuaneunete, ti x (2) Employee contributions. x
b. A stotecent which sets forth: © Saaployer conietbations. Xx
(1) Name or names of employers. x
(4) The bosis or formula for determining the amount of each
(2) Effective date of the plan and any omondments thereto. mY of benefit and the for ob such
benefits and the vesting conditions.
@) Method of distribution or of disb benefits (whether p.4
by trustee, insurance company, or otherwise). X
(¢) The dif: of the plan ond dis-
(4) Dotes when the ents dr were executed. X iributions or benefit p. upon d
() Dote of forma! announcement. x site: OY
eb pm nn é. 8 pension or annutty pion. © detailed description, of of Se
employees generally. X So ant bn pees Oe oust bs anneal copes wate’
when iny loot. connngency reserves,
™ Dot plan was put tate olfect. ».< special factors Benn yn dagraenann ye bregeng ser Bg
Sie rsa ce ste pel sendy cna aed sok
@) Dote when trust or contract and any amendments there‘o Wont anal died te tan Gana re ag sc Ie
ware pul inte elect co Shot contnibcsone thereunder wore ses ho backs ceed tn oahaiey tn tnvemtmenss held.
x.
; 81
ruye 9
PART I1.—DETERMINATION OF ALLOWABLE DEDUCTION
Schedule A—Employer Contribution: e instructions) Schedule F ontribution Carryover
Check whether contributions were made i: {Complete the following one tn ts Senate eam
Gd Cash (1D Other than cash to the current year, without regard to section 40407)
. Dates Paid Amount Dates Paid Amount Cumulstive
: Paid | 15,000.00 se bed Contributed Deductible |.,comyover,To
Pee ies See areas ei ee eee (a) (b) (c) (dd)
OS Se ee Se Se aE 19... Weemedes 3 alee ee
' = 19...
| Paid 9-13-65) 59,786.78 19
; : nies Ui csikcuntasiaeincmandibueled 19
19.
, - ee
: — Cumulative carryover equals column (d) from previous previous zecr pins cham
d oi ee 7h, 768: 78 (b) for current year, less column (c) for current year. instructions.)
SCHEDULE C.—PENSION TRUSTS AND ANNUITY PLANS (Complete either I or II)
I. Section 404(a)(1)(A) and (B) Limitations
1. Total nondeferred compensation paid or accrued during taxable year to all covered employces (from line
Na) Part I... 2... eececceserccrcccsossnccccesesecceascsscssccsscsncosaccgorsvocserecssevceteces $
2. Limitation under section 404(a)(1)(A)—5 percent of line 1 (unless limitation has been reduced). ..... mae |
3. Limitation under section 404(a)(1)(B) if aggregate cost method is used (See Regs., section 1.404(a)-S(c))... $
4. Total of lines 2 and 3 if aggregate cost method is used ....- 2... 0... 20.00 seeceeee eee eeecereeeeerenees $
8. (a) Gross annual p under “Individual Contract Plan” (see instructions).............-.see000 $
Ramee Se NN ANE IID Boi 5s na Sosa so 0 ag pc ws khaeap Carns vedssredidcesecscbapaaect $
Se Tipe sepia ais Dl DE Me Wats SOI aos oo on oi ein nntiaee access vecsciccvgeesices z
II. Section 404(a)(1)(C) Limitations
ae ee ae IS I I oi soos cs co bcc v cainkvs vend ob ebcecbevscbie thes vasness $
2. Total past service or supplemental base...............0 0c. cece cece eeeee $
ee ee OU Oe IN 0 2s oi co io anne ss cede cntns cubecvabou decease s dxyeapoanvarcces $
4. Total of lines 1 and 3....... Be ne ues avae iv aw ene Poe ie uee sane oobi uerSeiea vim tao doun tie ces $
i a RE UN i usin fu rusk ase ny which bask edanmnet dene beanncsobenebureucsene $
6. Net limitation (line 4 less line 5).... ..........,. Ue uiek k Pek dss e LcAbek hee hicewh. Mceinnoneiae $
SCHEDULE D.—PROFIT-SHARING AND STOCK BONUS PLANS (Section 404(a)(3)(A) Limitations) ~
1. Total nondeferred compensation paid or accrued for all employees under the plan (from line 7(a), Partl)... $ 1,295 802 Sk
2. Limitation—15 percent of compensation shown on line 1... 20.0.0... cece cece cece ence ees eneeeeeeee . $
3. Contributions by the employer during the year (from line 8(a), Part !).........6... 02 ccecceeseeeseeeee $ 7.786. 78
4. Contribution carryover from previous years (from line 8(b), Part I).................. UE Ti Wiba x eae $ .
8. Total contributions subject to limitation (from line 8(c), Part !)......... 0... c cece eee e cece ce ee eeneee $ 74.786. 78
i ae NUE CEN CII, Boos coins Sci ve ccc Civctetcnedicesutacavurdcevvues bes eines $ -
1. Limitations: Primary (lesser of line 5, or line 2) or secondary® .............0.0 ccc cee eccececeeceseeees $ 7h 786. 78
*Secondary (smallest of line 3. line 2 plus line 6, or two times line 2). Secondary limitation applies only if there is a credit carryover on line 6.
SCHEDULE E.—Section 404(a)(7) Limitati (See instructions)
1. Amount deductible for year under section 404(a)(7):
(a) 30 percent of d p NE src Fak sibs cy bu hak Gea cain aon eke saeass exe eds anees $
(b) (i) 25 percent of covered compensation in year...............0-2ceeeeeeeeee ga 3S sar pevacns ins $
(it) Total amount otherwise deductible for year........... Coch pate ee ae ak cei aue ewok Ppecseues $
Si I SU ve ee ia iie scene Kuda yd UA ee wasun vue pebaaap dese sudes $
(iv) Carryover from prior years under section 404(a)(7) (attach computation)....................- $
(v) ee NE I ae esau eswaswemaeke kn cunkos's Vasa ba seuetkaveneune $
WD Ramen Diatiitn Cannan ll Wad tr TOD os. coo cos encore Delcwcc vos cheese cen ceves sss s-
2. Carryover to succéeding years under section 404(o)(7) (line 1 (b)(év) plus al 1(b) (ii) less line 1(c))....... $ .
PART III.—DEDUCTION CLAIMED UNDER SECTION 404(a)(5)
1. Type of plan: 0) Pension or cnnuity OD Profit-sharing 0 Stock bonus (C0 Other plan of deferred p ti
2. The amount of the deduction........... $ 5. Was the amount deducted paid:
3. Total number cf employees covered... . 0) Directly to cn employee. a former employee, or his beneficiary
4. Total numbe: of employees empioyed. .. . ©) Toa trust a [ Te another
& He o suc’ t
-40Aiaiit id Sh ond mt te amount pet ¢ is an par bade ond hag the pepe ooghepe tam ae auee
and tha employees. richie 1, oF derwwed from the employer's contribution. or deferred ¢ smpensation tion were nonforieitable at the time
the be tion was peid? [ Yes o No
Fe US. Gov. bist oT PRINTING OFFICE thi—-O-693-s08
82
FORM 3468 | SAPUTATION OF MIVESTIIENT CRE. —193:
US. Treasury De zar:ment
Internal Revenue
Service | or taxable year beginning .... JULY... , 1964, ending June 30 1965
TO BE ATTACHED
Name (as shown on page 1 of your tax return)
IVAN ALLEN COMPANY
Address (number and street)
__ ROX 1712
Cry oF town, and State
; ATLANTA. GA. 30301
“T. Guolihied invesiment in new or used property
NOTE: Include your shore of investment in property by a partnership, estate, trust, small business corporation, or lessor.
(3)
(1) (2)
= Line Life yeorn Cost or basis Applicable percentage
wae
(column 2 x column 3)
(a) 406
NEW
(b) 6108
bed 16,452.00
PROPERTY
USED (C)] 4106
PROPERTY
enaenen dig 452.00...
(e)
(notion se
instructions)
10)
2. Total qualified investment—add lines 1(a) through (f)
3. Tentative investment credit—7% of line 2 (for public utility property, enter 3% of line 2)
4. Caryback and carryover of unused credit(s) (attach statement)... eee eee e eee e reese neces
5. TOTAL (line 3 plus line 4) 2
COMPUTATION OF TAX FOR PURPOSES OF LIMITATION
6. (a) Individuals (enter amount from line 12, page 1, Form 1040)
(b) Estates ond trusts (enter amount from line 25 or 26, page 1, Form 1041)....... 00-20. c eee eeeeeneeeneeee on
(<) Corporations (enter amount from line 5, Tax Computation Schedule, Form 1120)........-----+-+++++00005
1. Individuals, estates and trusts:
caer Sel Pees Ma IN, 5 256i ss ce Sanju ckis bn oeerccenrcencentveensey
(d) Total (add lines (a), (b), and (c))... 0-0. cece cece cece eee e nee enn enn eeresnenseebenees
&. Bolance (line 6 less line Wd)... 22-02. sce cece cence cnc cccsneveeererecersnecereusrecensessssesseeees
161,490.59
LIMITATION BASED ON AMOUNT OF TAX
(Manied persons hing separately, affilicted groups, estates and trusts—see instructions)
25 ,000.00
9. (a) Enter amount on line 8 or $25,000, whichever is lesser... .. 0... ee cee cee eee eee noc kereerhwasen enn
(b) If line 8 is in excess of $25,000, enter 25% of the excess... 6-6. e eee hence centre reste enereenene
() Md Wate Oi tated GU i ose oo aks oc be ee coo aed bao ind conv ag nb ehgpabnteveke
4 122.6
29,122.65
10. | t credit (enter amount on line 5 or Hc), whichever is lesser)... ....- ses
1,151.64
SCHEDULE A
If any port of your investment in 1 obove wos mode by a partnership, estate, trust, small business
Nome
Parnnenhip, estate, trust, etc.)
if
eee ae * Malden” ea Rin me ie
83
GENZRAL ISTRUCTIONS
A. Whe tAyst File—Any indi al, estate, trust, or corpore-
tion claiming en investment credit aguinst its tox must attach this
form to its income tox return. Portnerships and smal! busi
of the lessor. 1e lessor mokes this election, then the lessee is
treated as if he . ad acquired the property (see section 48(d) for
ination of basis).
rations are not required to file this form becouse the credit is
dloimed by the partner‘or sharcholder. However, partnerships and
smoi! Susiness corporations must attach a statement to their returns
esti the allocation of invest to the portners or shareholders
by amount, type and life of property os shown in item 1 of this form.
Estates and trusts which apportion the i between the estate
or trust ond the beneficiaries should in addition to filing this form
ettach o stat t showing the allocati of the i tment among
B. When Allowed.—A credit is allowed against your tox for
investment in certain depreciable property having on estimated use-
ful life of 4 years or more. The credit is allowed for the first year
property is ploced in service, even though under the depreciation
convention used you may not be able to claim a deduction for depre-
ciation on the property until the following year.
C. Property Defined.—The invest credit is opp
(e) tangible personal property, (b) rea! property (except for build.
ings ond theis structural components) if used as an integral part of
or , or used as o reseorch or
storage facility in connection with these ‘octivities, and (c) elevators
and lators, if their i ion, oF erection is com-
pleted by the taxpayer ofter Jone 30, 1963, or if they are acquired
after June .30, 1963, and their Original use commences with the tox-
payer and commences after such date.
leah!
The investment credit is not applicable to (1) certain property which
is used predominantly outside the United Stctes; (2) property used for
lodging or in ction with furnishing lodging, except (c) property
used in certain commercial facilities located therein (such os a restau-
rant) or (b) property used by a hotel or motel; (3) property used by a
fox-exempt organization (other than in a business to which the unrelated
bu-'ness income tox applies); (4) property used by governmental units;
(5) livestock (including racehorses).
D. Election for Leased Property.—A lessor moy elect to
trect an investment in new property as if made by the lessee instead
Where a lessor makes an election with respect to leascd property,
suck election must be made in accordance with section 43(d) and the
regulction; thereunder.
E. Replacement Property.—Where insured property is lost or
destroyed os a result of ° casvalty or is stolen, reinvestment of the
ds in repl property may not be eligible for in-
vestment credit.
F. Disposition of Property.—Where property is disposed of
prior to the life used in puting the i i credit, the tax for
the year in which the property is ‘eo disposed of must be increased
by the difference between the credit taken on such property and the
credit which would have bes= c!lowed had the actual life been used.
Such increase should be entered on the line provided om your tax return
’
G. Limitations With Respect to Certain Persons.—Iin the
case of (1) mutual savings banks, building ond loon associations and
cooperative banks, (2) o regulated i pany or a ‘real
estate investment trust subject to under Subchopter M, and
3) a perati tion described in section 1381(c), the
quolified investment ond the $25,000 limitation shall equal such per-
son's ratable share of such items in accordance with section 46(dX2).
H. Carryback and Carryover of Unused Credils.—if the
amount of the investment credit for any taxable year exceeds the
limitation, the excess shall be an investment credit carryback to each
of the 3 preceding taxable years and an investment credit carryover
to each of the 5 succeeding taxable years and shall be added to the
amount allowable cs a credit for such years. However, such excess
may be a carryback only to c taxable year ending after December
31, 1961.
1. Basis and Cost.—The credit for new property applies to the
basis of the property. The credit for used property applies to the cost
of the property. The cost (of used property) does not include the “asis
of any property traded in. No adj for additional first-yeor
depreciation of salvage value is required.
SPECIFIC LAISTRUCTIONS
Line 1. New Property.—Enter the basis of property as de-
scribed in General Instructions C and | placed in service during
the toxcble year. In the care of property d, cted
or erected by you, enter ‘only thet portion of the basis which i is properly
attributable to ‘ ion or erection after December
* 31, 1961,
Used Properi ,.—Enter the cost (subject to dollar limitation below)
of used pr-perty placed in service during thz taxable year.
DCeiiar Limiiction on Used Preperiy.—in general, the amount
of used property tcken into account moy not exceed $50,000. In
the cose of a hustand and wife filing sepcrate returns, and zach has
used property taken into account on their returns, the amount may
not exceed $25,000. In the case of a partnership, the $50,000
limitation shall apply with respect to the partnership and with respect
to each partner. In the case of cffilict:d sroups, the $50,000 limi
totion sholl be reduced for ecch membe: of the group by opp
Estates and Trusts.—tin the case of an estote or trust the amount
of the i t is ttioned bet the estate or trust and the
beneficiaries on the bosis of the income of the estateror trust allocable
to each.
Line 6. Individuals and core filing forms other than Forms
1040 and 1120, use the tqx figure shown on your return which is
comporable to the figure to be used by a taxpayer using Form 1040
or 1120,
Line 9. Lisnit-iicn Bosed on Amount of Tax.—In the cose
of a husband and wife filing separate returns anc! both hove quolified
investments, the amourt specificd on lines He) and (b) shall be
$12,500 insteod of $25,000. ‘In the cose of affiliated groups, the
$25,000 specified on lines 9(0) and (b) shall be reduced for each
member of the group by opportioning the $25,000 among the mem-
bers of such group. In the cose of an estate or trust the $25,000
ing $50,CCO among the members of such group in accordonce with
their respective amounts of used greperty which may be taken into
account.
specified on lines 9(c) and (b) shall be reduced to an
amount which bears the some ratio to $25,000 as the amount of
quolified investment a:loccted to the esate or trust bears to the entire
quolified investment.
; 4 /
Exhibit B
eh | US Cath COE TAX a al [itu
4
f
=. a "nly ne att, 66 $ -
pod ba as aa oe ers at arene We ee tved OF try me EMG ad Ranneeen ob ee 3 1
ten ile~ Nome Pit j £. Employer Identi£cet.sn
" eager Pee zey $5-6125326 1966 DO St 6 eee 8-03. 35820
ea et fae eee
C Symnsinatnece. S- Tladtd GA $0301 ——|__Pulton_ 9 -
© Busnes Cote Me - Cure 5924? 1573 S104. R Spec resssss*s / -
5298 , ee : eae ms ‘ Lg 166. 420,53 ;
IMPORTANT— Alloppiicebie lines and schedules nut be filled in. Ifthe ines on the schedules are nit gl cient, 54 sae . Ses : :
1, Gross receipts or gross sales . .t Less: Returns and eb 0 caceiaeceesvecesese 1015.53 73.16 ee
$. ese: Cost of:gohde eokd Schedule A) andior operations (attach schedule). bee oe ee ad ni 3 a O78 .
PE Cake c ide ea eCurakeel dary chs ch neachesesuporceibieccdbdcochidessscecesbvopavesss 4 iS a
ne ; | : ma ASL
Fe RN us couch ascdencet Be il scseuBbesl ccs — 2.8. a
iM. TOTAL income—Addvlines 3 through 10 eee ee se cees 2,951,316.91
12. Compensaticn of otficers (Schedule E).. 0.2... oe eee cc ceccseccueveee 5 FE ng Sag eg sevveenseet DOI PU EF
3%. Salaries and wages (nct deducted elaewHere)..... 0.5 ...ececceececeeees fae T Rape hones as np 2B9, 165.54 |
14. Repairs (do not include cost ci improverenis or captal experditures)......... see venedesaeus coovsonenenee ead tt. b2 :
15. Bad debts (Schedule F if reserve metinad isused) ....6 eee. eee Seah hci slis hea readin ke ee ; «
sk esa ace btidcarceossescnocAvecstoidhs 306.02
. 1S. Contributions (attach schedule—see irstructicns for limitation) .............. , !
20. Losses by fire, storm, shipwreck, cther. casualty, or thelt (attech schedule). .. 1
i I EE UN og ssa o'sg ca ddileaxeiadvanbandeovicessdeevaaccssecsoeceyars !
Ia I os ois secs ediewapapexwto o i
I isc poonaceeennsjalte
| SN Shree aU ovaries Lhe daa avec ebeceuntn ceccewiibdbnvcesebentetsss¢piavencebecude !
© | 28. (a) Pension, prefit-sharing, stock boris, anlitty plons (see instructions).
(b) Other employee bere’st plans (see instructions)... 5. dec e cece ceccerccrecccsevescuseseces wees Sean we
a RN 55's ss Sikns duis dbdasedooci tocnccencce scent 277,642.63, <
21. ee ad. cubes buswasowseebuneudee nike 2 270,415,065 ©
28. Taxable income Sefcre net operating cas deduction and special deductions {line 11 less line 27).........|... 680 7901.05 3 -
29. Less: (a) Net cperating icss deduction ‘see instructions—cttach schedule)... sfeoeeeee a L
GP Gppcial dodiactiens Cchesite Oooo icc ek ven cccvecvdass eee aes o.5 1388. 86 } $1,368.86
38. Tanable income (line 28 less tineZH.... 8 wee eee esses cerns eS a eee ad .! 629,512. Ao
n. TOTAL income tax {Schedule )... FSP SFM yA ed £322» 77
32. Credits: (2) Tox paid with Form, 7004 apphection for extension (attach copy}. .. va $1,860 00” 3
(b) Pay:nents and credits on 1205 deciaration of estimated tex ee ete Ie H
(ce) Credit from reguicted ix.sestment companies (attach Form 24399...) ......2..0000--00- 20000 ee. :
f (d) Other (specity) . | 34 800.00 4
33. If tax (line 3!) is larger than creas (ine 32),"the . balance is TAX DUE. Znter bclance here ——> 200 204 . 05
34. if tax “line 31, is less thon credits Gine 32).......0.2...... Enter the OVERPAYMENT here conaamnmaty
3S. Enter amount of line 24 vou want: Cred’*ed on 1966 estimcted tax... . Refunded . i
Under perwities of perjury | declare ti.ct I heve examined this return, nctading cccomeanving schedules ‘ard statements. an3 * @ ’
the best of my kno ledge and belie! it ta true. correct and complete. If prepared by a person other than taxpayer, his isbesed
on all isiormation cf which he has cny knowles 72 -) B 4
—_--—— PS “ Ps ‘
[sae Yk et Tee Li y. CER is Pee’ eam
—— Dote ee nt Sigr ature ct cihcer GODFREY, LAWRENCE r noRih
BUS tng el gC, ART OR, ON HN , ss A SGM CERTEO PUBLIC anectistA:86..<- --ancnsecere% =~
rte * fodion 2.3! cf hen” ea" ite m1 erate “COS Vi: > Sree Sim i
me Se 8 1 T609-6 .
Al
; ‘
4 '
‘ r 1120 0965) Pare?
. eS la
4 Si Schedula A—COST “GF “OODS SOLD Him weer a6 ite 4 9 Set rats See instruction 2)
= i. Sonie's at bezinnirg of year 498 ,560. 19 S. Total of lines 1 th.. ich 4............ .6,0° i 10° 0e7
4 2. Merchandise boug':t tor manufacture oracle. 4,227, 733.91 6. Less: Inventory at end of year £RS 910.462
q 4. Salaries and wages.....: = : | 7. Cost.ot qods ont (enter here and on line 2, 5
4. Other costs per Dock: (az ch sched!) 1, 32!: ste 1.10! 33 5,145, 22". 4 y
Schedule C—INCOME FROM DIVIDENDS .
13 Cortare
' \2 Domestic corpustons |” 15 4.,
1. Mame of Geciaring corpo: stion tasarie under chap’er 1,
uteltees trea te
wrser chapter |, intersst
reterred stack
| 4. Forergs corprratnns $ Other corporations
| Internal Revenue Cote Revenue Code
< Sans Sas
BR EEG Re eee ) SSS
Total of columns 2, 3,4, ond 5....... Schedule # pusei etl vanda canes | 60,457.46
Add amount includible by shareholder of cortrclled eas gn ectperat attach Form 3646)
Total (enter here and on line 4. pxge |) 60,457.48
Schedule E—COMPENSATION OF ¢ OFFICERS (See page § of instructions’ a at in
$ sa [ 3 Tume 6¢-| Percent of corporation i a
1. Mame, address, and social security number of e* wer 2. Title setet te _sack geared j pn a } 7 Capense scrount
Total compensation of clficers (enter here and on line 12. pace ')
‘ [( mmm s “Preter veal
a |
1166 ,000. 20
i
2. Trade notes and accourts re | 3. Stes on occovat
4. Gross amount added to
outstanding at end of year feserve
PU Sie mete MASS tau RP then re Sale eer Ley hie gen at ee
Schedule F—BAD DEBTS—RESERVE METHOD ‘See instruction 15) _
$. Aresrt crarget agartst
feserve
7 Pe for bad dedts at ere
ot year
i !
i bcos: :
i os * ” ae |
Fd Sf sovocampevess crys es sooves oe ; ~~
j '
¢ Schedule G—DEPRECIATION See instrsction 22
' a 2 col 2 state the a hor - mail od - dma 2 i
i hee nerd to lovers ue bir aoa in eclumn 3 st or oth ci assets meld at end of year Column 2 is not
Ti ee Fe ee a a a - ~- a
3 sdein | | ! Desrec: ses ie
ismcrecn 4 eC oe “gr? Sere
& 4. Total additions: Lest pear Jepreciat on (de + sm iter —> . 2,000.00
j RN ies ous Ke cckenscuree¥ ens te oe
I Furniture and fixtures ices onion / , ESR ESEES Heat AMES" SOL" Slee ey E SERRE PES:
¢ Transportation equip:nen : / L i.
: Machinery ond cther equipment . r : ; de
Other (specify) .. ; ; am oe
EEE SE ae eee | .
gee Seta ' ! /
4 ) | |
Ec at or it : : ,
4 Ae iliclna tier :n | swladininieomae hires aelbinn ' | ! ‘ere .
| Schedule ' Lg 33,100.03 ; | 86,640.02
7 2 Totals ales 700,03) 2 - -op S40.6 2
~ Be Less: Shanna ed densoitstenn siniced a Babel be A end eee whare OW TOUGTE: ov isc ok kick 6 Sevcewaveainns ; 38,58) .3:
i 4. Balance--Enter here and on lire ~ st J : 69,958 .€
ia aR ” Schedule H—-SUMMARY OF DEPRECIATION tae
afer
res at
ost 9a ser’
“i
2,000.
v ver
*» Otrer see" “5d
co
86
COST _OF GOODS MANUFACTURED
IVAN ALLEN COMPANY - ATLANTA, GEORGIA
Year ended June 30, 1966
Other
TOTAL MANUFACTURING EXPENSE
TOTAL COST OF GOODS MANUFACTURED
4 429.71 a
34,529.93 217,046.
Quick-
copy Printing
Inventory - materials, June 30, 1965 . $ 5,498.10 $ 65,155.96
Purchase#g- materials 94 237.23 594,159.68
Freight 12. 2,605.70
»T40.12 1,921.3
Less inventory - materials, June 30, 1966 6. JO-.194 06
MATERIALS USED ool. $ fa
Direct labor © ,566.89 $ 334,288.
™ Manufacturing expenses:
Labor - indirect - 69,809.53
Payroll taxes 1,800.00 9,600.00
Rent - building . - 19,800.00
- equipment 1,790.42 797 «25
Heat, power and water - 13,075.18
Depreciation, equipment 1,253.42 17,327.91
Insurance - 5,933.68
Taxes, general - 2,512.Ce
Maintenance, equipment 3,675 43 16,365.99
Supplies - departmental 5,371.58 3,259.94
- litho - 3,757.05
- letcerpress - 3,419.26
*- composition 2,782 .82' 5,169.51
- cutting machine . 5. 860.72
- bindery "B" - 1,517.84
- plate making 9,237.25 7,336.26
- collator ° 3,070.04
- rotary press - 1,486.66
- camera - 5,182.57
Outside services 4,183.62 25,650.58
$180 898.59 $1,143, 862.60
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STATEMENT TF Pc oti.T. PLANT AND QUT
fanaa’
TVAN ALLEN COMPANY - ATLAIITA, GEROGIA
Year ended June 30, 1966
Allowance for depreciation
Cost less
_ Balance
Jun. 30,1965 Provision Disposals Ju
Balance depreciation
n. 30,1966 Jun. 30, 1966
Assets
2 ; Balance Balance
Jun. 30, 1965 Additions Disposals Jun. 30, 1966
Rental property:
Land:
972 Marietta St. $ 35,250.00 $ - $ - $ 35,250.00
1740 Peachtree st. 120,000.00 ° - 120,000.00
221 Ivy st. 150,000.00 - - 150,000.00
660 Forrest Road 72,000.00 - - 72,000.00
Parking lot ~ 56,375.00 . 56,375.00
Buildings:
972 Marietta St.: \
1948..- 34 81,997.69 - - 81,997.69
Improvements: . .
Sprinkler - 1948 - 5¢ past. - - 9,937.00
Roof - 1955 097.84 © - 4,097.84
1740 Peachtree st.:
1959 - 54 - (A) 183,078.48 - - 183,078.48
Improvements - 1959 - (A): .
Elevator 10% 15,500.00 ° - 15,500.00
Blacktop - 13.34 6,900.00 - _ 6,900.00
Electrical - 13.34% 31,000.00 - - 31,000.00
Plumbing, heating and
air-conditioning - 13.3% 63,000.00 - - 63,000.00
Carpets, etc. - 20% 9,000.00 - - 9,000.00
aed ry 101,012.25 101
- ,012. - . 012.25
1963 addition - 4¢ bby, 765.14 - ° 44 , 765.14
1963 roof - 54 8,156.00 - - 8,156.00
1963 waterproofing and
sign - 20% 9,190.54 ~2 - 9,190.54
660 Forrest Road: ; ,
1964 = 54 - (A) 124 94 - - 124,558.94
2 L : 23 : heed .
ae 196 yet $ 49.2h $ $ 8.
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