Distributors Finance Corp. v. Commissioner
United States Tax Court
1. Petitioner purchased more than 80 per cent of the outstanding stock of X corporation and caused it to sell its operating assets to Y corporation in return for debentures of Y, the assumption of liabilities of X, and an adjustment in cash. Thereafter X was liquidated, petitioner receiving the debentures along with cash and other assets. Held, no gain was recognized on the liquidation of X under the provisions of section 112(b)(6), Internal Revenue Code.
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1. Petitioner purchased more than 80 per cent of the outstanding stock of X corporation and caused it to sell its operating assets to Y corporation in return for debentures of Y, the assumption of liabilities of X, and an adjustment in cash. Thereafter X was liquidated, petitioner receiving the debentures along with cash and other assets. Held, no gain was recognized on the liquidation of X under the provisions of section 112(b)(6), Internal Revenue Code. International Investment Corporation, 11 T. C. 678, affirmed 175 F. 2d 772 (C. A. 3); Tri-Lakes Steamship Co. v. Commissioner, 146 F. 2d…
1Opinion of the Court
OPINION.
Raum, Judge:
Petitioner urges that the liquidation of Grand Rapids, whereby it received assets having a fair market value of $764,069.48 in exchange for stock which it had purchased for $617,347.50, was tax free under section 112 (b) (6) of the Internal Revenue Code.2 The consequence of petitioner’s contention is that realized gain in the amount of $146,721.98 would forever escape taxation. Petitioner recognizes that such result may be “startling,” but argues that it follows strictly from the unambiguous language of the statute.
Section 112 (b) (6) does provide, under specified…
2Cases cited21 opinions
- Minnesota Tea Co. v. HelveringSupreme Court of the United States · 1938
- Helvering v. Alabama Asphaltic Limestone Co.Supreme Court of the United States · 1942
- 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
- Commissioner of Internal Revenue v. Ashland Oil & Refining Co.Court of Appeals for the Sixth Circuit · 1938
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3Cited by1 opinion
- Distributors Finance Corp. v. CommissionerUnited States Tax Court · 1953