Schuster v. Commissioner
United States Tax Court
T transferred the entire business of his sole proprietorship, including accounts receivable, in exchange for all the capital stock of a corporation in a transaction which qualified for nonrecognition of gain or loss under sec. 351, I.R.C. 1954. Held, T was not entitled to a deduction for an addition to the proprietorship's bad debt reserve in the year of the transfer. Held, further, the remaining balance in the bad debt reserve must be restored to income in that year.
1Opinion of the Court
OPINION
Baum, Judge:
The Commissioner determined a deficiency in petitioners’ income tax for the year ended December 31,1961, in the amount of $7,337.36. Petitioners have agreed to most of the Commissoner’s adjustments, and dispute here only the Commissioner’s actions with respect to the reserve for bad debts account of a sole proprietorship once operated by petitioner Max Schuster. The entire business of the proprietorship, including its accounts receivable, was transferred to a corporation on October 31, 1961, in a nonrecognizable transaction which qualified under section 351, I.R..C. 1954,…
2Cases cited14 opinions
- Geyer, Cornell & Newell, Inc. v. CommissionerUnited States Tax Court · 1946
- West Seattle National Bank of Seattle v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1961
- Wilkes-Barre Carriage Co. v. CommissionerUnited States Tax Court · 1963
- West Seattle Nat'l Bank v. CommissionerUnited States Tax Court · 1959
- Wilkes-Barre Carriage Co., Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1964
9 more not listed; retrieve them via the Exa API.
3Cited by13 opinions
- Estate of Beck v. Comm'rUnited States Tax Court · 1971
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- Nash v. United StatesCourt of Appeals for the Fifth Circuit · 1969
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8 more not listed; retrieve them via the Exa API.