Groman v. Commissioner
United States Supreme Court
302 U.S. 82 (1937)
Facts
Groman (plaintiff) and other shareholders of Metals Refining Company entered into a contract with Glidden Company under which Metals Refining would be merged into a subsidiary formed by Glidden. The shareholders assigned their Metals Refining stock to the subsidiary and in return received a combination of stock in Glidden, stock in the subsidiary, and cash. Metals Refining then transferred its remaining assets to the subsidiary and was dissolved, the final step in an event known as a forward triangular merger. Groman included the cash in his taxable income but excluded the stock on the reasoning that the merger had been a tax-free corporate reorganization. The Commissioner of Internal Revenue (the commissioner) (defendant) determined that Glidden was not a party to the reorganization as contemplated by federal statute and that the Glidden stock was taxable. Groman sought a redetermination before the Board of Tax Appeals. The board found in Groman’s favor. The commissioner appealed. The circuit court of appeals found in favor of the commissioner, and Groman appealed. The United States Supreme Court granted certiorari.
Rule of Law
Issue
Holding and Reasoning (Roberts, J.)
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