W. S. Farish & Co. v. Commissioner
United States Board of Tax Appeals
Petitioner exchanged its capital stock for securities having a fair market value in excess of the par value of its stock, plus indebtedness assumed. The fair market value of the securities represented actual cost thereof to petitioner.
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Petitioner exchanged its capital stock for securities having a fair market value in excess of the par value of its stock, plus indebtedness assumed. The fair market value of the securities represented actual cost thereof to petitioner. Computed on such basis, petitioner had an operating deficit at the close of the taxable year 1934. Held, petitioner was not "formed" for the purpose of enabling its shareholders to escape tax, and, since petitioner had no accumulation of "gains and profits" but an impairment of paid-in capital, it was not "availed of" for such purpose in the taxable year and is…
1Opinion of the Court
*154OPINION.
Hill :
Section 104 of the Revenue Act of 1932, as amended by section 214 of the National Industrial Recovery Act, 48 Stat. 195, 207, applicable to petitioner’s taxable year ended October 31, 1934, provides that if any corporation, however created or organized, is formed or availed of for the purpose of preventing the imposition of any internal revenue tax upon the shareholders through the medium of permitting its gains and profits to accumulate instead of being divided or distributed, there shall be levied, collected, and paid for the taxable year upon the net income of such…
2Cases cited4 opinions
- Helvering v. National Grocery Co.Supreme Court of the United States · 1938
- Edwards v. DouglasSupreme Court of the United States · 1925
- Willcuts v. Milton Dairy Co.Supreme Court of the United States · 1927
- Helvering v. CanfieldSupreme Court of the United States · 1934
3Cited by17 opinions
- American Metal Products Corp. v. CommissionerUnited States Tax Court · 1960
- Estate of Goodall v. CommissionerCourt of Appeals for the Eighth Circuit · 1968
- Gpd, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Sixth Circuit · 1974
- Chicago Stock Yards Co. v. Commissioner of Internal RevenueCourt of Appeals for the First Circuit · 1942
- GPD, Inc. v. CommissionerUnited States Tax Court · 1973
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