Tom C. Clark

“ The cash payments were debited to cash account on the assets side of petitioner's ledger and were credited to earned surplus either upon receipt or after having first been assigned to contributed surplus. The values of the buildings acquired were set up in a building account on the assets side and were credited to surplus. [5] In every instance the cash received by petitioner from a community group was less than the amount expended by it for the acquisition or construction of the local factory building and equipment. ”

“ The construction of the concrete plant directly benefited the supplier of raw materials by insuring the use of its sole product by the taxpayer; the supplier was also served through a business affiliation with the parent of the wholly owned taxpayer in the form of an exclusive marketing arrangement which saved the supplier the expense of a sales organization. ”

“ The first required petitioner to locate, construct and equip, or to enlarge a factory in the community, to operate the factory 'continuously so long as it is practicable in the conduct of its business for at least a period of ten years,' and to meet a minimum payroll, in consideration of which the community group agreed to transfer land and cash 'to be used for the payment of suitable factory building or buildings' ”

“ McKay Products Corp., supra, 178 F.2d at 643: '* * * the assets received * * * are being used by the taxpayer in the operation of its business. They will in time wear out, and if (the taxpayer) is to continue in business, the physical plant must eventually be replaced. Looking as they do toward business continuity, the Internal Revenue Code's depreciation provisions-and especially those which provide for a substituted rather than a cost basis-would seem to envision allowance of a depreciation deduction in situations like this. ”