Morley Cypress Trust, Schedule "B" v. Commissioner
United States Tax Court
In the course of liquidation of a corporation, all the shares of which were owned equally by three shareholders, a new corporation was organized. All of the then remaining assets of the liquidating corporation were transferred to the new corporation and all the shares of the new corporation were issued to the three shareholders, who surrendered their old shares to the old corporation for cancellation.
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In the course of liquidation of a corporation, all the shares of which were owned equally by three shareholders, a new corporation was organized. All of the then remaining assets of the liquidating corporation were transferred to the new corporation and all the shares of the new corporation were issued to the three shareholders, who surrendered their old shares to the old corporation for cancellation. Held, the receipt of the new shares by the shareholders was in an exchange pursuant to a plan of reorganization and gain may not be recognized. Sec. 112 (b) (3), Revenue Act of 1938.
1Opinion of the Court
OPINION.
Sternhagen, Judge:
The following deficiencies were determined in the petitioners’ income taxes for 1938 and 1939:
Morley Cypress Trust, Schedule “A” for 1938-$5, 279. 01
Morley Cypress Trust, Schedule “B” for 1938_ 9,241.71
Minnie A. Page Trust, for 1938_ 11,246. 82
Minnie A. Page Trust, for 1939- 94.44
The only proposition which remains in controversy is petitioners’ contention that their receipt in 1938 of shares of the Southern Land Products Co. was in a reorganization and therefore free from the recognition of gain. Sec. 112 (b) (3), Revenue Act of 1938. Other than a few which in our…
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