Alderman v. Commissioner
United States Tax Court
Held: 1. Under sec. 357(c), I.R.C. 1954, petitioner had a taxable gain to the extent that her and her deceased husband's liabilities assumed by newly formed corporation A exceeded the adjusted basis of assets transferred in a sec. 351 exchange. 2. A promissory note executed and contributed to corporation A by the shareholders had a zero basis for determining whether the liabilities transferred exceeded the basis of the assets transferred. 3. The entire excess of liabilities…
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Held: 1. Under sec. 357(c), I.R.C. 1954, petitioner had a taxable gain to the extent that her and her deceased husband's liabilities assumed by newly formed corporation A exceeded the adjusted basis of assets transferred in a sec. 351 exchange. 2. A promissory note executed and contributed to corporation A by the shareholders had a zero basis for determining whether the liabilities transferred exceeded the basis of the assets transferred. 3. The entire excess of liabilities over basis was allocable to depreciable property and therefore the gain is taxable as ordinary income under sec. 1239,…
1Opinion of the Court
OPINION
Dawson, Judge:
Respondent determined a deficiency of $4,568.42 in petitioner’s Federal income tax for the year 1963. There are two issues for decision: (1) Whether section 357(c), I.R.C. 1954,1 applies when property is transferred pursuant to section 351(a) and the trans-feror issues a promissory note equal to the amount by which the liabilities assumed by the transferee exceed the adjusted basis of the assets transferred; and (2) whether the excess of the liabilities over basis of the assets is taxable as ordinary income to the transferor under section 1239.
This case was submitted…
2Cases cited3 opinions
- Raich v. CommissionerUnited States Tax Court · 1966
- N. F. Testor v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1964
- Testor v. CommissionerUnited States Tax Court · 1963
3Cited by20 opinions
- Smith v. CommissionerUnited States Tax Court · 1985
- Bussing v. CommissionerUnited States Tax Court · 1987
- Yamamoto v. CommissionerUnited States Tax Court · 1980
- John P. And Alice Bongiovanni v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1972
- Lessinger v. CommissionerUnited States Tax Court · 1985
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