Orange Sec. Corp. v. Commissioner
United States Board of Tax Appeals
1. Petitioner is the transferee of one Giles, who in the year 1926 sold certain real property with a basis of $5,720, taking in exchange therefor notes with a face value of $98,700. Giles reported no gain on this transaction. These notes, transferred to petitioner in a tax-free exchange in 1930, were settled by the debtor during the taxable year for $80,000. Held, petitioner must use as basis in computing gain the basis of the property to its transferor.
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1. Petitioner is the transferee of one Giles, who in the year 1926 sold certain real property with a basis of $5,720, taking in exchange therefor notes with a face value of $98,700. Giles reported no gain on this transaction. These notes, transferred to petitioner in a tax-free exchange in 1930, were settled by the debtor during the taxable year for $80,000. Held, petitioner must use as basis in computing gain the basis of the property to its transferor. Gain so computed is the difference between $5,720 and $80,000. 2. Payment of $5,000 extra compensation to petitioner's general manager for…
1Opinion of the Court
*27OPINION.
Arundell :
The issues enumerated at the outset are considered here in their order and without restatement.
Issue No. 1.
First for consideration is the basis for computing gain or loss on the settlement of the Beeman notes in the taxable year 1937. The value of the stock received in settlement, it is agreed, was $80,000; the division between the parties is the basis of the notes, whether $98,700, their face value, as contended by the petitioner, or $5,720, as argued by the respondent. As grounds for its contentions the petitioner claims now that the notes received by Giles in 1926 had a…
2Cases cited1 opinion
- R. H. Stearns Co. v. United StatesSupreme Court of the United States · 1934
3Cited by13 opinions
- Mayfair Minerals, Inc. v. CommissionerUnited States Tax Court · 1971
- Arkansas Best Corp. v. CommissionerUnited States Tax Court · 1984
- Bartel v. CommissionerUnited States Tax Court · 1970
- Estate of Broadhead v. CommissionerUnited States Tax Court · 1966
- Rivers v. CommissionerUnited States Tax Court · 1968
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