Eastern Shares Corp. v. Commissioner
United States Board of Tax Appeals
Where a corporation issued to its stockholders rights to subscribe to certain of its unissued stock on a basis of one new share for each two old shares held and such stock rights had a fair market value at the time of receipt by the stockholders, and petitioner failed to exercise the rights issued to it and allowed them to lapse and become worthless, held, petitioner is not entitled to a deductible loss by reason of the lapse of such rights.
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Where a corporation issued to its stockholders rights to subscribe to certain of its unissued stock on a basis of one new share for each two old shares held and such stock rights had a fair market value at the time of receipt by the stockholders, and petitioner failed to exercise the rights issued to it and allowed them to lapse and become worthless, held, petitioner is not entitled to a deductible loss by reason of the lapse of such rights. St. Louis Union trust Co. et al., Co-trustees,30 B.T.A. 370, followed.
1Opinion of the Court
OPINION.
Black :
In this proceeding respondent has determined a deficiency of $4,303.46 for the year 1929.
Petitioner assigns one error, as follows:(a) Respondent has erroneously disallowed a deduction of $38,622.40, being petitioner’s basis for certain rights to subscribe to stock, which rights were neither exercised nor disposed of, and which expired in the taxable year.
The facts were all stipulated and are a part of the record. We relate only such facts here as we deem necessary to a clear understanding of the issue involved in this proceeding.
Petitioner, a corporation organized under the…
2Cases cited1 opinion
- Miles v. Safe Deposit & Trust Co. of BaltimoreSupreme Court of the United States · 1922
3Cited by3 opinions
- Ramapo, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1936
- Commissioner of Internal Revenue v. PalmerCourt of Appeals for the First Circuit · 1937
- Eastern Shares Corp. v. CommissionerUnited States Board of Tax Appeals · 1935