Hunter Mfg. Corp. v. Commissioner
United States Tax Court
In 1946, petitioner acquired the remaining 24 per cent minority interest in the capital stock of its foreign subsidiary and immediately liquidated the latter. At the time of such acquisition the subsidiary was insolvent, and the acquisition of the minority interest was without a business purpose. Held, petitioner did not become affiliated with its subsidiary within the intent of section 23 (g) (4) of the Internal Revenue Code.
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In 1946, petitioner acquired the remaining 24 per cent minority interest in the capital stock of its foreign subsidiary and immediately liquidated the latter. At the time of such acquisition the subsidiary was insolvent, and the acquisition of the minority interest was without a business purpose. Held, petitioner did not become affiliated with its subsidiary within the intent of section 23 (g) (4) of the Internal Revenue Code. The loss sustained in 1946 by reason of the worthlessness of the capital stock of the subsidiary is a capital loss and not an ordinary loss. Held, further, the phrase…
1Opinion of the Court
OPINION.
LeMire, Judge:
The primary question presented is whether the loss sustained by petitioner in 1946, as a result of the worthlessness of the capital stock of MUSA, is an ordinary loss within the purview of section 23 (g) (4), as contended by the petitioner, or a capital loss under section 23 (g) (2), as determined by the respondent.
The respondent contends that 76 per cent of the capital stock of MUSA owned by the petitioner was worthless prior to the petitioner’s acquisition, for a nominal amount, of the remaining 24 per cent on July 15, 1946; that the purchase of the minority interest…
2Cases cited7 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- Higgins v. SmithSupreme Court of the United States · 1940
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