Hollenbeck v. Commissioner
United States Tax Court
Held: Purported "sec. 1244 stock" did not qualify as such because, though issued to a partnership in cancellation of claimed preexisting debt, such claimed debt was, or had become, equity capital of the corporation (under all of the circumstances here present) at the time of the adoption of the sec. 1244 "plan," and remained equity capital until such stock was issued a short time later.
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Held: Purported "sec. 1244 stock" did not qualify as such because, though issued to a partnership in cancellation of claimed preexisting debt, such claimed debt was, or had become, equity capital of the corporation (under all of the circumstances here present) at the time of the adoption of the sec. 1244 "plan," and remained equity capital until such stock was issued a short time later. It follows that the partners' losses (petitioners herein) are capital, rather than ordinary, under the provisions of sec. 1244(c)(1)(D) of the Code of 1954.
1Opinion of the Court
FORRESTER, Judge:
The respondent has determined deficiencies in the 1961 individual income taxes of petitioners in the following amounts: Docket No. 209-66, Edwin C. and Kathryn J. Hollenbeck, $8,991.73; docket No. 210-66, Wade G. and Anita L. Ellis, $7,689.47. Upon a joint motion of the patties the above docket numbers were consolidated for purposes of trial, briefing, and decision. The issue presented is the same in both cases; it is whether or not the petitioners are entitled to deduct as an ordinary loss their distributive share of a partnership’s loss under section 1244. The partnership,…
2Cases cited17 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- John Kelley Co. v. CommissionerSupreme Court of the United States · 1946
- Gooding Amusement Co. v. CommissionerUnited States Tax Court · 1954
- Benjamin D. And Madeline Prentice Gilbert, on Review v. Commissioner of Internal Revenue, on ReviewCourt of Appeals for the Second Circuit · 1959
- United States v. Simon W. Henderson, Jr., Independent for the Estate of Louise R. Henderson, DeceasedCourt of Appeals for the Fifth Circuit · 1967
12 more not listed; retrieve them via the Exa API.
3Cited by19 opinions
- Smyers v. CommissionerUnited States Tax Court · 1971
- Edwin C. Hollenbeck and Kathryn J. Hollenbeck, Wade G. Ellis and Anita l.ellis v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1970
- Hill v. CommissionerUnited States Tax Court · 1969
- Kaplan v. CommissionerUnited States Tax Court · 1972
- Turner v. CommissionerUnited States Tax Court · 1974
14 more not listed; retrieve them via the Exa API.