W. & K. Holding Corp. v. Commissioner
United States Board of Tax Appeals
1. Securities were transferred to a corporation for shares of its preferred stock and the recipients of the stock expected, but had no agreement, to receive at some future time a fixed amount of cash upon redemption of the stock.
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1. Securities were transferred to a corporation for shares of its preferred stock and the recipients of the stock expected, but had no agreement, to receive at some future time a fixed amount of cash upon redemption of the stock. Held, the transaction was a nontaxable exchange within section 112(b)(5) and not a sale of the securities with payment deferred. 2. A distribution in redemption of 60 percent of its common stock, made by a corporation without any intention of liquidating or of accomplishing any business need, but solely for the purpose of distributing an extraordinarily large profit…
1Opinion of the Court
*839OPINION.
Murdock :
Issue I. — Sale by W. <& K. of Securities Acquired from Its Stockholders in Exchange for Preferred Stock.
The petitioner, W. & K., contends that it is entitled to use as its basis for gain or loss on the disposition of the securities the cost of those securities to its stockholders because the property was acquired in an exchange of the kind described in section 112 (b) (5) of the Eevenue Act of 1932. The statutory provision is as follows:
SEC. 112. RECOGNITION OP GAIN OR LOSS.(b) Exchanges Solely in Kind.—
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* * * * <t * *(5) Transfer to corporation controlled by…
2Cases cited3 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- Massachusetts v. MellonSupreme Court of the United States · 1923
- Heald v. District of ColumbiaSupreme Court of the United States · 1922
3Cited by15 opinions
- Wheeler v. CommissionerCourt of Appeals for the Ninth Circuit · 1944
- Del Mar Addition v. CommissionerUnited States Board of Tax Appeals · 1939
- Isthmian S. S. Co. v. United StatesDistrict Court, D. Delaware · 1940
- Rochester Gas & Electric Corp. v. McGowanCourt of Appeals for the Second Circuit · 1940
- Wilson v. CommissionerUnited States Tax Court · 1962
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