Year book of motion pictures (1925)

Educational Equipment Co., 1913 Commerce St., Dallas, Tex. Howe-Stevens Service, Inc., 311 So. Sarah St., St. Louis, Mo. „ , _ „ Church & School Film Exchange, Polk BIdg., Des Moines, Iowa. _ ,, Visual Instruction Bureau, Inc., 1/7 Golden Gate Ave., San Francisco, Cat. Standard M. P. Service, 719 So. Olive St., Los Angeles, Cal. SUPPLY DEALERS Ralph Harris & Co., Boston, Mass.A T. Thompson, Boston, Mass. J. F. Adams, Buffalo, N. Y Carolina Theater Supply Co, Charlotte, N C. Burke 2nd James, Chicago, 111. Movie Co-operative Supply Co., Cincinnati, O. Simplex Theater Supply Co., Dallas, Tex. Exhibitors Supply Co., Denver, Colo. Des Moines Slide Co., Des Moines, la. Exhibitors Supply Co., Des Moines, la. Service Theater Supply Co., Detroit, Mich. Consolidated Film and Supply Co., El Paso, Tex. McCarthy Theater Supply Co., Fargo. N. D. Imperial Film Supply Co.. Greenville, S. C. Repass, Harris and Co., Hartford, Conn. Chas Stebbins Picture Supply .Co., Kansas City, Mo. Pacific Amuse. Supply Co., Los Angeles, Cal. Louisville Film and Supply Co., Louisville, Ky. Memphis Photo Supply Co.. Memphis, Tenn. Southern Theater Equipment Co., New Orleans. La. Acme Theater Equipment Co., 1600 Broadway, New York, N. Y. Beseler Lantern Slide Co., 131 E. 23rd St, New York, N Y. National Uniform Co., 12 John St., New York City. Herbert and Huesgen. 18 E. 42nd St., New York City. Duplex Motion Picture Industries, Inc., 1819 Broa l.vay. New York City. Anderson Theater Supply Co., Oklahoma City, Okla. Exhibitors Supply Co.. Omaha, Neb. White, Jordan and White, Omaha, Neb. Maine Theater Supply Co., Portland, Me. Burden and Salisbury, Inc., Rochester, N. Y. Utah Theater Supply Co., Salt Lake City, Utah. B. F. Shearer Equipment Co., Seattle, Wash. Zimmerman Bros., Sioux City, la. Sioux Falls Theater Supply Co., Siox Falls, S. D. George Limbocker, Springfield, Ohio. 3 207 ARBITRATION CASES IN NEW YORK The annual report of the F. I L. M. Club of New York City, covering the period from Sept. 1, 1923 to Aug. 31, 1924 shows that 3,207_ cases were submitted to arbitration, conducted jointly by the club and the T. O. C. C. Of this number, 183 were contested, 1.526 settled before hearing before the Joint Arbitration Board, 1,356 were detaults, 62 were dismissed and 80 cases were withdrawn. INTERNAL REVENUE TAX DECISION Relative to Lease and Contract Conditions The value of theater leases, good will connected therewith, and film contracts acquired for stock must be determined, for invested capital purposes under the provisions of the Revenue Act of 1918, in the light of facts and circumstances existing at the time of the acquisition thereof. The subsequent earnings alone which are not shown to have been reasonable, anticipated or based upon past experience or known existing facts are not sufficient evidence to establish a valuation of such assets. This the United States Board of Tax Appeals has ruled in deciding adversely to the appeal of the Saenger Amusement Company, Inc., from a deficiency in tax assessed by the Commissioner of Internal Revenue in December. The appeal involved excess profits taxes for 1918 and 1919, and arose from the disallowance by the company of certain theater leases, good will conected theiewith, and film contracts, and also from the disallowance in invested capital of the amount of stock issued, based upon the writing up of the value of film contracts acquired from outside interests in the ordinary course of business. When the Saenger Amusement Company was incorporated in 1913 as a successor to the partnership of Saenger Brothers, it had a capital stock of $100,000 par value and acquired leases on the Saenger, Palace, Queen, Lyceum and Princes? Theaters. John and Ad Saenger each held 40 per cent of the stock and L. M. Ash and E. V. Richards were each given 10 per cent of the stock. No property was turned in by either L. M. Ash or E. V. Richards, but the Saengers exchanged leases on the five theaters, the equipment therein and good will connected therewith, and film contracts for their share of the stock. In 1915, contracts were made with certain producers, and the corporation issued an additional amount of $50,000 par value stock to its stockholders in proportion to their stock ownership which represented the value of the contracts as determined by the corporation in excess of the consideration required to be paid for the use of films. The Commissioner disallowed the value of the leases on the various theaters, on the ground that no value had been established, and also the alleged value of the film contracts on the ground that it was not proven that they had a value in excess of the consideration required to be paid for the use of the films. In handing down its opinion, the Board of Tax Appeals pointed cut that the question involved is whether the film contracts and the theater leases had an actual value. The taxpayer relied upon the earnings of the corporation and the success which it attained in subsequent years to establish the value of the leases, contracts, etc., turned over to it for stock when it was organized. "While subsequent earnings are not to be disregarded in determining the values of leases and contracts, it must be kept in mind that it is only the value of assets shown to exist at the time the stock was issued therefore which can be included in invested capital," the decision holds. "The determination of values of assets paid in for stock must be made in the light of all available evidence existing at the date of the acquisition. Subsequent earnings may be used only to corroborate or substantiate a valuation based on the reasonable expectation of future earnings A valuation, however, based upon the expectation of future earnings must be determined in the light of known facts existing at that time or upon past experience. A hope of future earnings not based upon some known facts or circumstances, or a mere guess by the owners as to the future earning capacity, however accurate it may be proven to be by subsequent events, does not prove value. Future earnings alone are not proof without reference to the facts from which they could have been reasonably anticipated." Similar reasoning is applied to the film contracts under consideration. Famout Players Earnings Famous Players earnings, according to the Wall Street Journal, are as follows : 1918 $1,281,175 1919 3,109,22b 1920 5,321,240 1921 4,683,971 1922 4,105.872 1923 4,240,669 Foreign Tie Up for Artists John J. Livingston formed the Livingston European M. P. Co. of New York in October, and made an arrangement with the Lichtbild Buhne of Berlin, looking toward the placing of American talent in foreign pictures. 345