Budd International Corp. v. Commissioner
United States Board of Tax Appeals
1. Taxpayer in 1936 made a sale of British corporation shares which in 1930 it had acquired with other assets and rights in a conglomerate exchange for 360,000 of its own shares, which was then treated as tax-free under section 112(b)(5), Revenue Act of 1928, with a resulting basis to taxpayer of transferor's original cost of $1,000,000. Taxpayer now claims that the 1930 transaction was not tax-free, that it is not required to use transferor's basis, and that its own basis…
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1. Taxpayer in 1936 made a sale of British corporation shares which in 1930 it had acquired with other assets and rights in a conglomerate exchange for 360,000 of its own shares, which was then treated as tax-free under section 112(b)(5), Revenue Act of 1928, with a resulting basis to taxpayer of transferor's original cost of $1,000,000. Taxpayer now claims that the 1930 transaction was not tax-free, that it is not required to use transferor's basis, and that its own basis is its actual cost at acquisition, which is greater than transferor's basis. Held that, even though the 1930 transaction…
1Opinion of the Court
*745OPINION.
Sternhagen :
The first matter to be determined is the petitioner’s basis of gain on the sale of its Pressed Steel common in 1936. Petitioner demands the use of its own cost and respondent demands the use of the preceding owner’s cost. This dispute turns upon the legal question whether the exchange in 1930 by Schroder and *746the Manufacturing Co. of cash and assets, respectively, for petitioner’s shares was tax-free under the Revenue Act of 1928, section 112 (b) (5).1 If the proportions in which petitioner’s shares were issued to them were the same as their proportionate ownership had been…
2Cases cited2 opinions
- Helvering v. R. J. Reynolds Tobacco Co.Supreme Court of the United States · 1939
- Fairbanks v. United StatesSupreme Court of the United States · 1939
3Cited by21 opinions
- Downer v. CommissionerUnited States Tax Court · 1967
- Smith v. CommissionerUnited States Tax Court · 1976
- Budd International Corp. v. Commissioner of Int. Rev.Court of Appeals for the Third Circuit · 1944
- Tilford v. CommissionerUnited States Tax Court · 1980
- Frantz v. CommissionerUnited States Tax Court · 1984
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