Sconset Oil Co. v. Commissioner

Board of Tax Appeals

Sconset Oil Co. v. Commissioner

26 B.T.A. 419, 1932 BTA LEXIS 1307

CourtUnited States Board of Tax Appeals

DecidedJune 15, 1932

DocketDocket No. 40527.

StatusPublished

Cited by3 cases

This text of 26 B.T.A. 419 (Sconset Oil 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

Sconset Oil Co. v. Commissioner, 26 B.T.A. 419, 1932 BTA LEXIS 1307 (bta 1932).

Pincite

Opinion

[420]*420OPINION.

Lansdon:

The only controversy in this proceeding relates to the basis for computing profit from the sale of assets acquired by the petitioner from an individual in exchange for all of its capital stock. The respondent has determined that the basis is to be determined under section 204 (a) (8) of the Revenue Act of 1926 and that it is cost of the property to the transferor. The petitioner contends that the basis is cost of the assets, which is the fair market value of the stock paid therefor.

Section 204 (a) (8) of the Revenue Act of 1926 ¹ provides that where property is acquired by a corporation for stock in connection with a transaction described in paragraph (4) of subsection (b) of section 203² the basis for computing profit or loss shall be the same as it would have been in the hands of the transferor. We have held repeatedly that section 204 (a) (8) is applicable to a situation such as that presented here. Perthur Holding Co., 23 B. T. A. 1128; Paradox Land & Transport Co., 23 B. T. A. 1228; Burlington Gazette Co., 21 B. T. A. 156; and Haas Building Co., 22 B. T. A. 528. Upon authority of the above decisions the respondent’s determination is approved.

The petitioner alleges that section 204 (a) (8) of the Revenue Act of 1926 is unconstitutional as violating the Fifth Amendment. The similar section of the Revenue Act of 1924 has been before the Federal courts on at least two occasions and its constitutionality has been upheld. Newman, Launders & Co. v. United States, 68 Ct. Cls. 641; 36 Fed. (2d) 1009; certiorari denied, 281 U. S. 760; and Osburn California Corporation v. Welch, 39 Fed. (2d) 41; certiorari denied, 282 U. S. 850. Upon authority of those decisisons we uphold the validity of the section questioned.

Decision will be entered for the respondent.

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

[420]*420OPINION.

Lansdon:

The only controversy in this proceeding relates to the basis for computing profit from the sale of assets acquired by the petitioner from an individual in exchange for all of its capital stock. The respondent has determined that the basis is to be determined under section 204 (a) (8) of the Revenue Act of 1926 and that it is cost of the property to the transferor. The petitioner contends that the basis is cost of the assets, which is the fair market value of the stock paid therefor.

Section 204 (a) (8) of the Revenue Act of 1926 ¹ provides that where property is acquired by a corporation for stock in connection with a transaction described in paragraph (4) of subsection (b) of section 203² the basis for computing profit or loss shall be the same as it would have been in the hands of the transferor. We have held repeatedly that section 204 (a) (8) is applicable to a situation such as that presented here. Perthur Holding Co., 23 B. T. A. 1128; Paradox Land & Transport Co., 23 B. T. A. 1228; Burlington Gazette Co., 21 B. T. A. 156; and Haas Building Co., 22 B. T. A. 528. Upon authority of the above decisions the respondent’s determination is approved.

The petitioner alleges that section 204 (a) (8) of the Revenue Act of 1926 is unconstitutional as violating the Fifth Amendment. The similar section of the Revenue Act of 1924 has been before the Federal courts on at least two occasions and its constitutionality has been upheld. Newman, Launders & Co. v. United States, 68 Ct. Cls. 641; 36 Fed. (2d) 1009; certiorari denied, 281 U. S. 760; and Osburn California Corporation v. Welch, 39 Fed. (2d) 41; certiorari denied, 282 U. S. 850. Upon authority of those decisisons we uphold the validity of the section questioned.

Decision will be entered for the respondent.

Cite This Page — Counsel Stack

Bluebook (online)

26 B.T.A. 419, 1932 BTA LEXIS 1307, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sconset-oil-co-v-commissioner-bta-1932.

Opinion

Related

Cite This Page — Counsel Stack