Heintz v. Commissioner
United States Tax Court
Petitioners organized Jack & Heintz, Inc., in 1940, and thereafter held all its outstanding common stock. Such stock had a basis to them of $ 112,000 in 1946. The corporation achieved remarkable growth and earnings, but in 1945, petitioners became apprehensive about their ability to successfully convert its activities to peacetime production. They decided to sell their entire interest in the company.
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Petitioners organized Jack & Heintz, Inc., in 1940, and thereafter held all its outstanding common stock. Such stock had a basis to them of $ 112,000 in 1946. The corporation achieved remarkable growth and earnings, but in 1945, petitioners became apprehensive about their ability to successfully convert its activities to peacetime production. They decided to sell their entire interest in the company. They negotiated with B. C. Milner, Jr., with respect to an $ 8,000,000 cash deal. When Milner and his associates were unable to raise the total purchase price in cash, petitioners accepted an…
1Opinion of the Court
OPINION.
Rige, Judge:
The tax consequences of this transaction, or series of transactions, depend upon whether they are characterized as a sale or as a “reorganization.” Petitioners contend that we must regard the sequence of events as initially comprising two completely independent transactions. The first would be the sale of their stock in Jack & Heintz, Inc., for cash plus securities of the purchasing corporation, a transaction fully taxable at capital gains rates.. The second transaction, in petitioners’ view, was the statutory merger of Precision’s 1-day-old operating subsidiary, Jack &…
2Cases cited3 opinions
- Southwest Natural Gas Co. v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1951
- Roebling v. CommissionerCourt of Appeals for the Third Circuit · 1944
- Southwest Natural Gas Co. v. CommissionerUnited States Tax Court · 1950
3Cited by14 opinions
- Penrod v. CommissionerUnited States Tax Court · 1987
- McDonald Restaurants of Illinois, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1982
- McDonald's of Zion, 432, Ill., Inc. v. CommissionerUnited States Tax Court · 1981
- Andantech L.L.C. v. Comm'rUnited States Tax Court · 2002
- G.D. Parker, Inc. v. Comm'rUnited States Tax Court · 2012
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