El Paso Electric Railway Co. v. Commissioner

[80] OPINION. Van Fossan: The sole issue presented in this appeal is whether contributions in money received in aid of construction of petitioner’s power-line extensions constituted taxable income. The facts in this case are similar, in all essential respects, to those which obtained in the Appeal of Liberty Light & Power Co., 4 B. T. A. 155. In that case the petitioner entered into contracts with certain individuals for the construction of rural transmission lines in Ohio and Indiana. The contracts provided that the lines should be the property of the power company, and that the individuals should contribute a certain part of the cost of construction. The entire cost of construction [81] was charged to the property account and the amount contributed by the individuals was credited to an account designated “ Donations in Aid of Construction.” Relying upon the decision of the Supreme Court in the case of Edwards v. Cuba Railroad Co., 268 U. S. 628, the Board held that such contributions did not constitute taxable income to the power company. There is no material distinction in that case from the one under consideration. See also Great Northern Railway Co. v. Commissioner, 8 B. T. A. 225. Respondent was in error. Judgment will be entered on 15 days' notice, under Rule 50.