Mente & Co. v. Commissioner
United States Board of Tax Appeals
Petitioner in 1925 acquired all the stock of another company in exchange for its own stock and bonds. On the same day the other company was dissolved and its assets conveyed to petitioner. Following these transactions, petitioner's stock was owned by the same persons who had formerly owned the stock of the other company.
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Petitioner in 1925 acquired all the stock of another company in exchange for its own stock and bonds. On the same day the other company was dissolved and its assets conveyed to petitioner. Following these transactions, petitioner's stock was owned by the same persons who had formerly owned the stock of the other company. Held that the assets of the other company were acquired "in connection with a reorganization" under section 204(a)(7) of the Revenue Act of 1926 and the basis for depreciation is the same as it would be in the lands of the transferor.
1Opinion of the Court
*403OPINION.
Aeundell:
Petitioner contends that it should be allowed to take depreciation deductions on the increased value shown by the appraisal of assets taken over from the Burlap Manufacturing Company, Inc., hereinafter called the Burlap Company. Respondent’s position is that the correct basis for depreciation is the same basis upon which the Burlap Company was entitled to compute depreciation.
Section 204(c) of the Revenue Act of 1926 provides as follows:
The basis upon which depletion, exhaustion, wear and tear, and obsolescence are to be allowed in respect of any property shall be the same as…
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