Bhada v. Commissioner
United States Tax Court
89 T.C. 959 (1987)
- Written by Kelli Lanski, JD
Facts
McDermott, Inc., was the parent company to a group of companies, including McDermott International (MI), a wholly owned subsidiary. MI made an offer to McDermott and McDermott’s shareholders to exchange cash and shares of MI’s stock for shares of McDermott’s common stock. Rohinton and Patricia Bhada (plaintiffs) owned shares in McDermott and tendered their shares to MI in exchange for MI stock. Ultimately, MI acquired 30 million shares of McDermott from McDermott’s shareholders, for which it paid $10,500,000, and 30 million MI shares. The Bhadas filed a petition with the commissioner of the Internal Revenue Service (commissioner) (defendant) to determine whether I.R.C. § 304 applied to the transaction, meaning the MI stock the Bhadas received should be treated as a taxable distribution in redemption of stock in McDermott.
Rule of Law
Issue
Holding and Reasoning (Nims, J.)
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