Smyers v. Commissioner
United States Tax Court
The petitioners' controlled corporation issued $ 55,000 of purported "sec. 1244 stock" for cash. The corporation then used $ 20,000 of the issue price to repay the petitioners for advances they had previously made to the corporation.
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The petitioners' controlled corporation issued $ 55,000 of purported "sec. 1244 stock" for cash. The corporation then used $ 20,000 of the issue price to repay the petitioners for advances they had previously made to the corporation. The corporation used the remaining $ 35,000 of the issue price to repay an outstanding bank loan which had been guaranteed by the petitioners. 1. Held, that the petitioners are not entitled to an ordinary-loss deduction on the exchange of purported sec. 1244 stock which did not qualify as such when issued to a partnership in consideration for an already existing…
1Opinion of the Court
Fat, Judge:
The respondent determined deficiencies in tbe Federal income taxes of tbe petitioners as follows:
Docket No. Year Deficiency
4557-69. 1964 $1,- 299. 09 1965 5, 874. 86
4558-69. 1964 1, 325. 18 1965 6, 032. 94
4559-69. 1964 4, 210. 55 1965 12, 239. 53
After certain concessions by each party, tbe following questions remain for our consideration: (1) Whether advances in tbe form of loans made 'by tbe petitioners were capital contributions to a corporation; (2) whether bank loans made to a corporation and guaranteed by tbe petitioners were in fact capital contributions from tbe petitioners…
2Cases cited22 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- Whipple v. CommissionerSupreme Court of the United States · 1963
- McWilliams v. CommissionerSupreme Court of the United States · 1947
- John v. Rowan v. United StatesCourt of Appeals for the Fifth Circuit · 1955
- Nassau Lens Co., Inc. v. Commissioner of Internal Revenue, Commissioner of Internal Revenue v. Harry Pildes and Sarah PildesCourt of Appeals for the Second Circuit · 1962
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3Cited by30 opinions
- Estate of Leavitt v. CommissionerUnited States Tax Court · 1988
- Blum v. CommissionerUnited States Tax Court · 1972
- Casco Bank & Trust Co. v. United StatesCourt of Appeals for the First Circuit · 1976
- Benak v. CommissionerUnited States Tax Court · 1981
- Alfred O. And Margaret A. Bates v. The United States of AmericaCourt of Appeals for the Sixth Circuit · 1978
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