TW Phillips, Jr., Inc. v. Commissioner of Int. Rev.

WOOLLEY, Circuit Judge.

On February 9, 1925, T. W. Phillips, Jr., transferred to T. W. Phillips, Jr., Incorporated, about $1,060,000 worth of securities, at prices then current, in return for all of its shares of stock of equal value. Thus Phillips came into “control” of the corporation. No other consideration was involved, no gain was recognized in the transaction and no taxable profit or income was ever reported by Phillips. In 1925, 1926 and 1927 the corporation sold all of these securities at profits of which it made returns for the stated tax years based on the difference between cost to…