Steadman v. Comm'r
United States Tax Court
Petitioner, an attorney, purchased 32,000 additional shares of stock in a corporation to protect his position as its secretary and general counsel. The corporation's organizational concept called for extensive acquisitions and mergers involving considerable legal planning.
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Petitioner, an attorney, purchased 32,000 additional shares of stock in a corporation to protect his position as its secretary and general counsel. The corporation's organizational concept called for extensive acquisitions and mergers involving considerable legal planning. The corporation suffered a large loss in 1962 causing a deficit in the shareholders' equity and was adjudicated bankrupt in 1964. Held, the corporation's stock became worthless in 1962. Held further, petitioner is entitled to deduct the loss occasioned by the worthlessness of the 32,000 shares as an ordinary loss under sec.…
1Dissent
TaNNENWAld, /.,
dissenting: I cannot agree that petitioner’s loss occurred in 1962. In Sterling Morton, 38 B.T.A. 1270 (1938), affd. 112 F. 2d 320 (C.A. 7, 1940), the essential standards for a determination of worthlessness are lucidly set forth as follows at pages 1278-1279:
The ultimate value of stock, and conversely its worthlessness, will depend not only on its current liquidating value, hut also on what value it may acquire in the future through the foreseeable operations of the corporation. Both factors of value must be wiped out before we can definitely fias the loss. If the assets of…
2Cases cited12 opinions
- Burnet v. Sanford & Brooks Co.Supreme Court of the United States · 1931
- Morton v. CommissionerUnited States Board of Tax Appeals · 1938
- Morton v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1940
- De Loss v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1928
- Bart v. CommissionerUnited States Tax Court · 1954
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