Casco Products Corp. v. Commissioner
United States Tax Court
Standard Kollsman Industries Inc. owned 91 percent of the shares of Old Casco. After unsuccessful attempts to purchase the remaining 9 percent, it formed petitioner (New Casco) and acquired all of its shares. Old Casco then merged into petitioner, the minority shareholders becoming entitled only to a cash payment for their shares.
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Standard Kollsman Industries Inc. owned 91 percent of the shares of Old Casco. After unsuccessful attempts to purchase the remaining 9 percent, it formed petitioner (New Casco) and acquired all of its shares. Old Casco then merged into petitioner, the minority shareholders becoming entitled only to a cash payment for their shares. Held, the transaction was a redemption of the minority shares of Old Casco, the merger being merely incidental thereto, with the result that petitioner may carry back its operating loss against the taxable income of Old Casco.
1Opinion of the Court
OPINION
The factual situation against which the decision herein must be made is extremely narrow. Standard Kollsman set out in 1960 to become the sole shareholder of Old Casco. Pursuant to a public tender, it succeeded in acquiring approximately 91 percent thereof through voluntary sales by existing shareholders. Having found that its public tender could not entirely accomplish its purpose, Standard Kollsman resorted to the legal technique of a merger, permitted under Connecticut law, to force out the remaining shareholders of Old Cascp. As its instrument, it formed New Casco and acquired 100…
2Cases cited8 opinions
- Kimbell-Diamond Milling Co. v. Comm'rUnited States Tax Court · 1950
- Kimbell-Diamond Milling Co. v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1951
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- Stauffer v. CommissionerUnited States Tax Court · 1967
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