United States v. Cedarburg Milk Co.

288 F. 996, 2 A.F.T.R. (P-H) 1933, 1922 U.S. Dist. LEXIS 1056, 1922 U.S. Tax Cas. (CCH) 2069

Opinion

GEIGER, District Judge.

The facts, without controversy, show that the Cedarburg Milk Company, on a sale or other disposition of the property, made a gain. The taxability of such gain is not to be avoided by the corporation upon the theory that, in a sense, its property became merged with the property of the defendant Gridley Dairy Company. The contract entered into by the corporation deals exclusively with its transfer of its property, and the circumstance that such contract hound the Gridley Dairy Company to increase its capital stock and issue a part of it to the Cedarburg Milk Company, “or to such persons as it may designate,” simply emphasizes the transfer as a corporate act of disposition as upon ordinary sale. Clearly, the corporation cannot affirm such disposition, yet claim that it had no right, under the law of Wisconsin, to stipulate for part of the consideration in corporate stock of the vendee, wherefore taxability is avoided.

The government is entitled to a decree, whose terms may be settled upon five days’ notice.