Reynolds Metals Co. v. Commissioner
United States Tax Court
In 1969, S, P's wholly owned subsidiary, issued debentures, convertible into shares of common stock of P. In 1987, S called the debentures for redemption, thereby prompting most debenture holders to convert their debentures into P's common stock. The converted debentures were subsequently redeemed by S for cash in an amount equal to the principal of the debentures with accrued interest.
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In 1969, S, P's wholly owned subsidiary, issued debentures, convertible into shares of common stock of P. In 1987, S called the debentures for redemption, thereby prompting most debenture holders to convert their debentures into P's common stock. The converted debentures were subsequently redeemed by S for cash in an amount equal to the principal of the debentures with accrued interest. P and its consolidated subsidiaries claimed a capital loss deduction under sec. 165(f), I.R.C., in the amount by which the fair market value of P's stock issued in the exchange exceeded the principal of the…
1Opinion of the Court
OPINION
Tannenwald, Judge:
Respondent determined deficiencies in petitioners’ 1987 and 1988 Federal income taxes in the amounts of $430,030 and $357,028, respectively. The sole issue remaining in dispute is whether petitioners are entitled to a capital loss deduction for 1987, under section 165(f),1 with respect to certain convertible debentures issued by a wholly owned subsidiary and convertible into the stock of the common parent corporation.
All the facts have been stipulated. The stipulation of facts and attached exhibits are incorporated herein by this reference.
Petitioners are the Reynolds…
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- Commissioner v. FinkSupreme Court of the United States · 1987
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3Cited by2 opinions
- Reynolds Metals Co. v. CommissionerUnited States Tax Court · 1995
- Reynolds Metals Company and Consolidated Subsidiaries v. CommissionerUnited States Tax Court · 1995