Garber Industries Holding Co. v. Commissioner
United States Tax Court
124 T.C. 1 (2005)
Charles Garber and Kenneth Garber were brothers and owned the stock of Garber Industries Holding Company (Garber Industries) (plaintiff). Garber Industries underwent a reorganization and the brothers’ ownership percentages of Garber Industries changed in a series of transactions. Ultimately, Charles’s ownership percentage in Garber Industries went from 68 percent to 19 percent to 84 percent. Kenneth’s went from 26 percent to 65 percent to zero after he sold all of his shares to Charles. On its tax return, Garber Industries claimed a net operating loss (NOL) deduction of about $800,000. The commissioner of the Internal Revenue Service (IRS) (defendant) adjusted the Garber Industries NOL deduction to about $120,000 under Internal Revenue Code (I.R.C.) § 382. Garber Industries filed a claim in the United States Tax Court.
Rule of Law
Holding and Reasoning (Halpern, J.)
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