H & M Auto Electric, Inc. v. Commissioner
United States Tax Court
P, a corporation, distributed in complete redemption of a shareholder's interest pursuant to sec. 302(b)(3) a parcel of land and a note receivable. The distributee assumed a portion of a liability secured by the parcel distributed. The shareholder also assumed an unsecured liability. Held, in applying sec. 311(c), P must allocate liabilities to assets to determine if liability exceeds basis.
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P, a corporation, distributed in complete redemption of a shareholder's interest pursuant to sec. 302(b)(3) a parcel of land and a note receivable. The distributee assumed a portion of a liability secured by the parcel distributed. The shareholder also assumed an unsecured liability. Held, in applying sec. 311(c), P must allocate liabilities to assets to determine if liability exceeds basis. Held, further, a secured liability should be allocated to the asset which secures it and an unsecured liability should be allocated among all the properties distributed according to the relative fair…
1Opinion of the Court
OPINION
Willams, Judge:
The Commissioner determined a deficiency in petitioner’s 1983 Federal income tax of $33,852. The issue we must decide is whether petitioner must recognize gain, pursuant to section 311(c),1 on the distribution of assets in complete redemption of a shareholder’s interest.
The facts of this case have been fully stipulated pursuant to Rule 122, Tax Court Rules of Practice and Procedure, and are so found. Petitioner, a corporation, had its principal office in Grand Rapids, Minnesota, at the time its petition was filed. Petitioner filed a Federal income tax return for its…
2Cases cited4 opinions
- C. D. Johnson Lumber Corp. v. CommissionerUnited States Tax Court · 1949
- Stern v. CommissionerUnited States Tax Court · 1976
- Bolles v. BoyerSupreme Court of Minnesota · 1919
- Waldref v. DowSupreme Court of Minnesota · 1927
3Cited by1 opinion
- H & M Auto Electric, Inc. v. CommissionerUnited States Tax Court · 1989