West Seattle Nat'l Bank v. Commissioner
United States Tax Court
Petitioner sold its banking business as a going concern and all of its assets, including its receivables, to another bank, which also assumed its liabilities, pursuant to a plan of complete liquidation under section 337, I.R.C. 1954. Held: The balance of petitioner's reserve for bad debts at the time it sold its receivables against which the reserve had been established is taxable as ordinary income to petitioner in the year of sale.
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Petitioner sold its banking business as a going concern and all of its assets, including its receivables, to another bank, which also assumed its liabilities, pursuant to a plan of complete liquidation under section 337, I.R.C. 1954. Held: The balance of petitioner's reserve for bad debts at the time it sold its receivables against which the reserve had been established is taxable as ordinary income to petitioner in the year of sale. Section 337, I.R.C. 1954, does not prevent taxation of such income to the corporation.
1Opinion of the Court
OPINION.
Drennen, Judge:
Respondent determined a deficiency in petitioner’s income tax for the taxable period January 1, 1956, to May 28, 1956, in the amount of $6,417.58.
The single issue involved is whether when petitioner sold its banking business as a going concern on January 27, 1956, and, pursuant to a preadopted plan of complete liquidation, dissolved on May 28, 1956, the balance in its reserve for bad debts at the time the assets, including receivables, were sold is taxable to it as ordinary income for the taxable period January 1, 1956, to May 28, 1956.
All the facts were stipulated and…
2Cases cited6 opinions
- Geyer, Cornell & Newell, Inc. v. CommissionerUnited States Tax Court · 1946
- Wichita Coca Cola Bottling Co. v. United StatesCourt of Appeals for the Fifth Circuit · 1945
- North American Coal Corp. v. Commissioner of Int. Rev.Court of Appeals for the Sixth Circuit · 1938
- Lutz v. CommissionerUnited States Tax Court · 1957
- Peabody Coal Co. v. COMMISSIONER OF INTERNAL REVENUECourt of Appeals for the Seventh Circuit · 1931
1 more not listed; retrieve them via the Exa API.
3Cited by49 opinions
- West Seattle National Bank of Seattle v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1961
- Mayfair Minerals, Inc. v. CommissionerUnited States Tax Court · 1971
- Citizens Federal Savings and Loan Association of Cleveland v. United StatesCourt of Appeals for the Federal Circuit · 1961
- Unvert v. CommissionerUnited States Tax Court · 1979
- Verito v. CommissionerUnited States Tax Court · 1965
44 more not listed; retrieve them via the Exa API.