Honbarrier v. Commissioner
United States Tax Court
115 T.C. 300 (2000)
Archie Honbarrier (plaintiff) was the sole director and stockholder of Colonial Motor Freight Line, Inc. (Colonial), a trucking company that specialized in the transport of furniture manufactured in North Carolina. Colonial held operating authorities issued by the state of North Carolina and the Interstate Commerce Commission (ICC). Following the deregulation of the trucking industry in the 1980s, increased competition caused Colonial to operate at a loss. Colonial ceased trucking operations in 1988. By the end of 1992, Colonial had sold all assets except for its ICC authority, investing the proceeds in tax-exempt bonds. Archie and his wife, Louise (plaintiff), served as directors of another trucking company, Central Transport, Inc. (Central), which transported chemicals in tanker trailers—an area of the industry with much less competition. All stock in Central was owned by Archie, Louise, and their two children, Gary and Linda. Unlike Colonial, Central held liquid investments to help it meet its cash needs. In late 1993, Colonial was merged into Central. Central stock was exchanged for Archie’s Colonial stock, in which he had a basis of $291,506, and a $7 million distribution was divided among the four Central shareholders, with Archie receiving the bulk. The total fair market value of assets received by Archie for his Colonial stock was $7,245,051. However, the Honbarriers treated the event as a nontaxable corporate reorganization. The Commissioner of Internal Revenue (defendant) saw otherwise and assessed a deficiency. The Honbarriers sought a redetermination in the United States Tax Court.
Rule of Law
Holding and Reasoning (Ruwe, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 707,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 707,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,500 briefs, keyed to 983 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.