S. A. Woods Machine Co. v. Commissioner

Board of Tax Appeals

S. A. Woods Machine Co. v. Commissioner

21 B.T.A. 818, 1930 BTA LEXIS 1783

CourtUnited States Board of Tax Appeals

DecidedDecember 19, 1930

DocketDocket No. 32015.

StatusPublished

Cited by8 cases

This text of 21 B.T.A. 818 (S. A. Woods Machine Co. v. Commissioner) is published on Counsel Stack Legal Research, covering United States Board of Tax Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

S. A. Woods Machine Co. v. Commissioner, 21 B.T.A. 818, 1930 BTA LEXIS 1783 (bta 1930).

Pincite

Opinions

[819]*819OPINION.

Black :

A number of cases have been considered by the Board involving the purchase by a corporation of its own capital stock and we have uniformly held that the corporation realizes no gain or loss from the purchase or sale of its own stock. Simmons & Hammond Mfg. Co., 1 B. T. A. 803; Farmers Deposit National Bank, 5 B. T. A. 520; H. S. Crooker Co., 5 B. T. A. 537.

While the circumstances under which petitioner acquired the shares of its own common stock from the Yates Co. in this proceeding are by no means the same as in the cases above cited, we think the same rule must govern. When the petitioner acquired the shares of its common stock from the Yates Co. and retired it, it was in possession of no additional assets thereby. The situation would be different if petitioner had acquired Liberty bonds or stocks and bonds of another corporation.

[820]*820For example, if petitioner had acquired 1,022 shares of the common stock of the U. S. Steel Corporation, it would have then owned something which it did not own before, viz., an interest in the U. S. Steel Corporation to the extent of the common stock acquired, and its income in the transaction would be measured by the value of the common stock at the time it was acquired. United States v. Phellis, 257 U. S. 156. But when it received 1,022 shares of its own common stock, it owned no property which it did not own before. The corporation, S. A. Woods Machine Co., was already the owner, of all the property of the corporation and the acquirement of these 1,022 shares added nothing to this ownership.

It is true that the book value of the remaining 1,978 shares of common stock was increased by the acquirement and cancellation of these 1,022 shares, but that added nothing to the income of the corporation. It simply caused an appreciation in the value of the remaining shares of the common stock of the corporation.

In this proceeding we can not see where petitioner received anything which fits into the definition of income as approved in Eisner v. Macomber, 252 U. S. 189, and Towne v. Eisner, 245 U. S. 418. See also Houston Bros. Co., 21 B. T. A. 804.

Reviewed by the Board.

Decision will be entered under Rule 50.

VaN FossaN did not participate in the consideration of or decision in this report.

Free access — add to your briefcase to read the full text and ask questions with AI

[819]*819OPINION.

Black :

A number of cases have been considered by the Board involving the purchase by a corporation of its own capital stock and we have uniformly held that the corporation realizes no gain or loss from the purchase or sale of its own stock. Simmons & Hammond Mfg. Co., 1 B. T. A. 803; Farmers Deposit National Bank, 5 B. T. A. 520; H. S. Crooker Co., 5 B. T. A. 537.

While the circumstances under which petitioner acquired the shares of its own common stock from the Yates Co. in this proceeding are by no means the same as in the cases above cited, we think the same rule must govern. When the petitioner acquired the shares of its common stock from the Yates Co. and retired it, it was in possession of no additional assets thereby. The situation would be different if petitioner had acquired Liberty bonds or stocks and bonds of another corporation.

[820]*820For example, if petitioner had acquired 1,022 shares of the common stock of the U. S. Steel Corporation, it would have then owned something which it did not own before, viz., an interest in the U. S. Steel Corporation to the extent of the common stock acquired, and its income in the transaction would be measured by the value of the common stock at the time it was acquired. United States v. Phellis, 257 U. S. 156. But when it received 1,022 shares of its own common stock, it owned no property which it did not own before. The corporation, S. A. Woods Machine Co., was already the owner, of all the property of the corporation and the acquirement of these 1,022 shares added nothing to this ownership.

It is true that the book value of the remaining 1,978 shares of common stock was increased by the acquirement and cancellation of these 1,022 shares, but that added nothing to the income of the corporation. It simply caused an appreciation in the value of the remaining shares of the common stock of the corporation.

In this proceeding we can not see where petitioner received anything which fits into the definition of income as approved in Eisner v. Macomber, 252 U. S. 189, and Towne v. Eisner, 245 U. S. 418. See also Houston Bros. Co., 21 B. T. A. 804.

Reviewed by the Board.

Decision will be entered under Rule 50.

VaN FossaN did not participate in the consideration of or decision in this report.

Cite This Page — Counsel Stack

Bluebook (online)

21 B.T.A. 818, 1930 BTA LEXIS 1783, Counsel Stack Legal Research, https://law.counselstack.com/opinion/s-a-woods-machine-co-v-commissioner-bta-1930.

Opinions

Related

Cite This Page — Counsel Stack