Raritan Co. of Delaware v. Commissioner

An individual borrowed a substantial sum from a bank and used it in the purchase of stock. Thereafter he organized a personal holding company under the laws of Delaware and transferred to it shares. other than those purchased with the borrowed funds, in exchange for its capital stock. Shortly thereafter a corporation was organized under the laws of Newfoundland. It acquired from the Delaware corporation the shares owned by it in exchange for most (all but three) of the shares of its capital stock. The Newfoundland corporation then purchased from the individual the stock which he had purchased…