Stires Corp. v. Commissioner
United States Board of Tax Appeals
1. BASIS FOR GAIN OR LOSS UNDER SECTION 204, REVENUE ACT OF 1926. - An option on oil stocks, acquired in 1925 by an individual, Pforzheimer, was at the time of acquisition worth considerably more than cost. Pforzheimer exchanged the option for all the stock of Homad Corporation, and then exchanged the Homad Corporation stock for all the issued stock of Satterfield Corporation.
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1. BASIS FOR GAIN OR LOSS UNDER SECTION 204, REVENUE ACT OF 1926. - An option on oil stocks, acquired in 1925 by an individual, Pforzheimer, was at the time of acquisition worth considerably more than cost. Pforzheimer exchanged the option for all the stock of Homad Corporation, and then exchanged the Homad Corporation stock for all the issued stock of Satterfield Corporation. Pforzheimer then purchased the capital stock of petitioner for cash and petitioner in turn purchased all the stock of petitioner Corporation from Satterfield Corporation for cash and the petitioner's note, which was…
1Opinion of the Court
*6OPINION.
Aeundblu :
In 1925 and 1926 petitioner sold stock of oil companies that it acquired in 1925 through the exercise of an option, as related in the findings of fact, and the principal question here is the determination of the proper basis for computation of gain or loss on the sales. The parties are agreed that the option must be taken into consideration in determining the basis for gain or loss. The petitioner contends that it should be taken into account at cost and that included in such cost is the amount it paid for the Homad Corporation stock, namely, $1,680,000. The respondent’s…
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