Bausch & Lomb Optical Co. v. Commissioner
United States Court of Appeals for the Second Circuit
267 F.2d 75 (1959)
- Written by Kelli Lanski, JD
Facts
Bausch & Lomb Optical Co. (B&L) (plaintiff) made and sold ophthalmic products. B&L wanted to combine itself with Riggs Optical Company (Riggs), a partially owned subsidiary in which B&L owned 9,923.25 shares of stock. To do this, B&L put together a plan, which it documented in internal correspondence, and initiated two transactions. First, B&L exchanged shares of its unissued voting stock for all of Riggs’s assets. Riggs’s employees also received shares of B&L’s stock. Second, Riggs dissolved and distributed its only asset, B&L stock, to its shareholders. B&L thus received many of its own shares back, with the remainder going to Riggs’s minority shareholders. B&L took the position that its acquisition of Riggs’s assets was a tax-free reorganization under § 368(a)(1)(C) of the Internal Revenue Code, claiming that it had acquired Riggs’s assets solely for B&L’s voting stock. However, viewing both transactions together, the commissioner of the Internal Revenue Service (commissioner) (defendant) decided that B&L had received Riggs’s assets partly in exchange for Riggs’s stock and partly for B&L’s stock. Thus, the gain B&L realized upon Riggs liquidating its assets was subject to tax. B&L sued, and the United States Tax Court agreed with the commissioner. B&L appealed.
Rule of Law
Issue
Holding and Reasoning (Medina, J.)
What to do next…
Here's why 830,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 46,400 briefs, keyed to 994 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.
