Appeal from the District Court of the United States for the Northern District of Indiana, Hammond Division; Thomas W. Slick, Judge.
Before EVANS and KERNER, Circuit Judges, and LINDLEY, District Judge.
An undistributed profits tax of $32,160.95 for the years 1936 and 1937, was disallowed by the District Court on the ground that appellee was not subject to the tax, because it was both "insolvent and in receivership." Our only question involves the correctness of the court's finding (or conclusion) that appellee was "insolvent" within the meaning of the statute for each of the tax years involved.
The Facts. The Company's receivership began in September, 1932, and ended November 26, 1938. The annual balance sheets for the years 1936 and 1937 and the monthly profit and loss statements for this period supply important, if not controlling, evidence on the vital issue of solvency.
The following statement is taken from appellee's income tax return:
Beginning of End of End of
1. Cash $19,453.72 $18,003.23 $33,401.49
2. Notes receivable 291.58 47,873.53 23,799.06
3. Accounts receivable 65,024.47 75,411.24 163,603.62
4.Inventories 32,247.32H127,368.90 160,028.59
7. Deferred charges 1,743.87 13,364.76 26,874.82
8. Capital assets 46,959.53 79,894.18 118,957.40
9. Patents and 250,223.65 257,442.84 260,682.99
11. Other assets 49,642.89 9,366.39 1,421.66
(other inventories) 701.00