Simmonds Precision Prods. v. Comm'r
United States Tax Court
In order to issue stock to the public, petitioner was required to terminate agreements providing for patent royalties and sales commissions payable to corporations controlled by its founder. On May 20, 1960, petitioner terminated the agreements and acquired the patents in exchange for unregistered shares of its stock and options, not immediately exercisable, to purchase additional shares at the public offering price.
Read the full summary
In order to issue stock to the public, petitioner was required to terminate agreements providing for patent royalties and sales commissions payable to corporations controlled by its founder. On May 20, 1960, petitioner terminated the agreements and acquired the patents in exchange for unregistered shares of its stock and options, not immediately exercisable, to purchase additional shares at the public offering price. On June 7, 1960, petitioner sold its stock to the public at a price fixed the day before. The options were exercised in 1968 when the stock had appreciated substantially. Held,…
1Opinion of the Court
Hall, Judge:
Respondent determined deficiencies in petitioner’s income tax as follows:
Year Deficiency
1967 . $157,101.66
1968 . 1,146,581.30
1969 . 238,562.22
Petitioner exchanged its stock and options for patents and other rights owned by Sir Oliver Simmonds and/or his wholly owned corporations. The primary issue is whether the options had an ascertainable fair market value. If not, and the transaction remained open until the options were exercised, we must determine the proper years for amortizing and expensing the patents and other rights acquired with the options. If the options had an…
2Cases cited31 opinions
- Burnet v. LoganSupreme Court of the United States · 1931
- Commissioner v. LoBueSupreme Court of the United States · 1956
- United States v. DavisSupreme Court of the United States · 1962
- Helvering v. Tex-Penn Oil Co.Supreme Court of the United States · 1937
- Commissioner v. SmithSupreme Court of the United States · 1945
26 more not listed; retrieve them via the Exa API.
3Cited by15 opinions
- Pagel, Inc. v. CommissionerUnited States Tax Court · 1988
- Snyder v. CommissionerUnited States Tax Court · 1989
- International Tel. & Tel. Corp. etc. v. CommissionerUnited States Tax Court · 1981
- FX Systems Corp. v. CommissionerUnited States Tax Court · 1982
- Reynolds Metals Co. v. CommissionerUnited States Tax Court · 1995
10 more not listed; retrieve them via the Exa API.