Moore-McCormack Lines, Inc. v. Commissioner
United States Tax Court
1. Petitioner purchased 10 ships from a single seller by the issuance of 300,000 shares of its own previously unissued stock. The stock so issued constituted 13 percent of petitioner's outstanding stock thereafter. Two of the ships so purchased were immediately resold.
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1. Petitioner purchased 10 ships from a single seller by the issuance of 300,000 shares of its own previously unissued stock. The stock so issued constituted 13 percent of petitioner's outstanding stock thereafter. Two of the ships so purchased were immediately resold. Held, the basis to petitioner of the two ships resold is determined by the fair market value of the stock issued to purchase them; the fair market value of such stock was $ 30 per share. 2. Held: The cost basis, for purposes of computing depreciation of various other vessels, purchased in 1941, is the "statutory sales price" as…
1Opinion of the Court
Hoyt, Judge:
Respondent determined a deficiency in income tax against petitioner in the amount of $663,519.48 for the taxable year 1957.
The issues for decision are:(1) What was the cost basis, for purposes of computing the correct amount of gain on sale, of two ships acquired by petitioner in 1957 for cash and stock, and resold in the same year ?(2) Is the cost basis, for purposes of computing depreciation, of various vessels purchased in 1941 the original purchase price as readjusted under section 9 of the Merchant Ship Sales Act of 1946 or the “statutory sales price” as calculated under the…
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