H. B. Zachry Co. v. Commissioner
United States Tax Court
Held, a carved-out oil payment transferred from petitioner to a subsidiary in exchange for common stock constituted "property" within the meaning of sec. 351(a), I.R.C. 1954. Held, further, this transfer was separate from petitioner's subsequent sale of preferred stock to such subsidiary for cash, and therefore qualified as a nontaxable exchange under sec. 351(a).
1Opinion of the Court
OPINION
On June 28,1961, the petitioner and Minerals entered into an agreement under the terms of which petitioner exchanged a carved-out oil payment in the amount of $650,000 for all 10 authorized shares of Minerals’ common stock. On June 29, 1961, Minerals borrowed $650,000 from the First City National Bank of Houston, using Zachry’s personal endorsement as the required collateral, with the intent of retiring this note on a term payout basis as an oil loan. On the same day Minerals paid petitioner the amount of $649,000 in exchange for 6,328 shares of petitioner’s preferred stock. These…
2Cases cited16 opinions
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