Lewis v. Commissioner
United States Tax Court
Operating assets of Corporation A were transferred to newly organized Corporation B in exchange for all of B's stock and the assumption of A's liabilities. Corporation A was thereupon liquidated, and all its assets, consisting of cash, marketable securities, and the B stock, were distributed in kind to its stockholders in exchange for their A stock. Accumulated earnings and profits of A at the time exceeded the gain to the stockholders.
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Operating assets of Corporation A were transferred to newly organized Corporation B in exchange for all of B's stock and the assumption of A's liabilities. Corporation A was thereupon liquidated, and all its assets, consisting of cash, marketable securities, and the B stock, were distributed in kind to its stockholders in exchange for their A stock. Accumulated earnings and profits of A at the time exceeded the gain to the stockholders. Corporation B continued to operate the business formerly conducted by A. Held, that there was "business purpose" in the transfer of operating assets from…
1Opinion of the Court
OPINION.
Akundell, Judge:
The origin of the so-called “business purpose” requirement for corporate reorganizations, as recognized in the opinion of the Circuit Court, is the case of Gregory v. Helvering, 298 U. S. 465, where the Supreme Court said of the predecessor of code section 112 (g) (1) (D):1
When subdivision (B) speaks of a transfer of assets by one corporation to another, it means a transfer made “in pursuance of a plan of reorganization” (section 112 (g)) of corporate business; and not a transfer of assets by one corporation to another in pursuance of a plan having no relation to the…
2Cases cited3 opinions
- Hill v. United States Ex Rel. WamplerSupreme Court of the United States · 1936
- Bazley v. CommissionerSupreme Court of the United States · 1947
- Commissioner v. Estate of BedfordSupreme Court of the United States · 1945
3Cited by45 opinions
- Lewis v. Commissioner of Internal RevenueCourt of Appeals for the First Circuit · 1949
- James Armour, Inc. v. CommissionerUnited States Tax Court · 1964
- Pridemark, Inc. v. CommissionerUnited States Tax Court · 1964
- American Mfg. Co. v. CommissionerUnited States Tax Court · 1970
- Easson v. CommissionerUnited States Tax Court · 1960
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