Gabriel Co. v. Commissioner
United States Tax Court
In 1925 petitioner entered into a transaction whereby it acquired the business and assets of a sole proprietorship for 1,000 shares, or one-half, of its class B voting stock and cash in the amount of $ 4,358,705.70, which cash was obtained from an underwriting concern to which petitioner sold 197,950 shares of its class A nonvoting stock and 950 shares of its class B stock.
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In 1925 petitioner entered into a transaction whereby it acquired the business and assets of a sole proprietorship for 1,000 shares, or one-half, of its class B voting stock and cash in the amount of $ 4,358,705.70, which cash was obtained from an underwriting concern to which petitioner sold 197,950 shares of its class A nonvoting stock and 950 shares of its class B stock. Held, that the petitioner, in computing the amount of its equity invested capital under section 718 (a) of the Internal Revenue Code, is limited to the amount of the cash, plus the value of the 1,000 shares of its class B…
1Opinion of the Court
OPINION.
ARundell, Judge:
The sole question presented herein concerns the amount petitioner may include in computing its equity invested capital under section 718 (a) of the Internal Revenue Code1 as representing the value of the property and assets of a business, including good will, which was acquired by the petitioner in 1925.
Petitioner views the transaction whereby it acquired Foster’s business as one involving a purchase of the business by Otis & Co. from Foster and a subsequent exchange of the business property by Otis to the petitioner for the petitioner’s capital stock. Basing its…
2Cases cited2 opinions
- Palomar Laundry v. CommissionerUnited States Tax Court · 1946
- American Business Credit Corp. v. CommissionerUnited States Tax Court · 1947
3Cited by1 opinion
- Gabriel Co. v. CommissionerUnited States Tax Court · 1949