Joseph Gann, Inc. v. Commissioner of Internal Revenue

This appeal challenges a tax Court decision 1 holding that Treasury Regulations Section 1.1012-l(c)(l) (1954 Code) (26 C.F.R.) is a valid regulation and is applicable to this case. The regulation provides that when a taxpayer sells stock without identifying which of several lots, purchased at different times and prices, has been sold, it will be presumed that the stock sold is the stock first acquired.

The corporate taxpayer-appellant stands to lose its favorable Subchapter S status under Section 1372 of the Internal Revenue Code by reason of its “passive investment income” exceeding 20 per…