Thalhimer Bros, Inc. v. Commissioner
United States Tax Court
Petitioner acquired control of a corporation engaged in a similar business by issuing its own shares in exchange for the shares of the acquired corporation. As a part of the bargain it agreed to repurchase its own shares at their book value at transferees' options. Said options were exercised, and petitioner immediately included the repurchased shares in a public offering where they were sold for substantially less than the option price.
Read the full summary
Petitioner acquired control of a corporation engaged in a similar business by issuing its own shares in exchange for the shares of the acquired corporation. As a part of the bargain it agreed to repurchase its own shares at their book value at transferees' options. Said options were exercised, and petitioner immediately included the repurchased shares in a public offering where they were sold for substantially less than the option price. Held: Petitioner's dealings in its own shares were entirely intracorporate and nonspeculative. Its speculation was in the stock and business of the…
1Opinion of the Court
OPINION
The question in the instant case is whether petitioner suffered a deductible loss on the sale of its treasury stock in 1953, and consequently is entitled to a capital loss carryover to the taxable year in issue. Section 1032(a) of the Internal Revenue Code of 1954 specifically prohibits any recognition of gain or loss on sales or exchanges of a corporation’s own stock.3 However, the instant case arises under the Internal Revenue Code of 1939 and is specifically governed by section 39.22(a)-15, Regs. 118, which reads as follows:
Sec. 39.22(a)-15 Acquisition or disposition tty a…
2Cases cited13 opinions
- Helvering v. GowranSupreme Court of the United States · 1937
- Koshland v. HelveringSupreme Court of the United States · 1936
- Dr. Pepper Bottling Co. v. CommissionerUnited States Tax Court · 1942
- United States v. Anderson, Clayton & Co.Supreme Court of the United States · 1955
- Cluett, Peabody & Co. v. CommissionerUnited States Tax Court · 1944
8 more not listed; retrieve them via the Exa API.
3Cited by1 opinion
- Thalhimer Bros, Inc. v. CommissionerUnited States Tax Court · 1969