McDonald's of Zion, 432, Ill., Inc. v. Commissioner
United States Tax Court
McDonald's Corp. (McDonald's) wanted to acquire several franchised restaurants owned primarily by three individuals, Garb, Stern, and Imerman (the Garb-Stern group). McDonald's refused to offer any consideration other than its common stock because of financial accounting reasons. Although the Garb-Stern group wanted a cash transaction, they eventually agreed to accept 361,235 shares of unregistered common stock.
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McDonald's Corp. (McDonald's) wanted to acquire several franchised restaurants owned primarily by three individuals, Garb, Stern, and Imerman (the Garb-Stern group). McDonald's refused to offer any consideration other than its common stock because of financial accounting reasons. Although the Garb-Stern group wanted a cash transaction, they eventually agreed to accept 361,235 shares of unregistered common stock. The merger took place as of Apr. 1, 1973, whereupon McDonald's dropped down the acquired restaurants into wholly owned, operating subsidiaries (the petitioners herein). As part of the…
1Opinion of the Court
Hall, Judge:
Respondent determined deficiencies in petitioners’ 1973 Federal income tax as follows:
Amount of Petitioner Docket No. deficiency
McDonald’s of Zion, 432, Ill., Inc .-..8083-77 $14,940
McDonald’s of Castro Valley, 433, Calif., Inc .8084^77 22,766
McDonald’s of Concord-Clayton, 434, Calif., Inc .8085-77 9,641
McDonald’s of San Leandro, 435, Calif., Inc .8086-77 26,372
McDonald’s of Oakland, 12th St., 436, Calif., Inc .•.8087-77 15,444
McDonald’s of Alameda, 437, Calif., Inc .8088-77 14,677
McDonald’s of Pomona, 438, Calif., Inc . 8089-77 $6,633
McDonald’s of Grand Rapids-28th St., 439,…
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