Helvering v. Alabama Asphaltic Limestone Co.
United States Supreme Court
315 U.S. 179 (1942)
- Written by Heather Ryfa, JD
Facts
Alabama Asphaltic Limestone Company (new corporation) (plaintiff) acquired the assets of Alabama Rock Asphalt, Inc. (old corporation) pursuant to a bankruptcy reorganization plan. The old corporation was a subsidiary of a bankrupt parent corporation. The new corporation was created, and all of the assets of the old corporation were transferred; the shares of the new corporation were distributed to assenting creditors. Creditors who refused shares were paid in cash. The new corporation continued the operations of the old corporation. The new corporation’s tax return reported that the assets were entitled to carryover basis under § 112 of the Internal Revenue Code because the assets were acquired in a corporate reorganization. The commissioner of the Internal Revenue Service (defendant) determined a deficiency, contending that the basis of the assets should be based on the sale price. The new corporation appealed to the Board of Tax Appeals, which found in favor of the corporation. The commissioner appealed to the United States Court of Appeals for the Fifth Circuit, which affirmed. The commissioner then appealed to the United States Supreme Court, contending that the basis of the assets should have been the market value at the time of the transfer.
Rule of Law
Issue
Holding and Reasoning (Douglas, J.)
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