King Enterprises v. United States

418 F.2d 511 (1969)

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King Enterprises v. United States

United States Court of Claims
418 F.2d 511 (1969)

Facts

Tenco, Inc. was a coffee company owned by King Enterprises, Inc. (plaintiff) and 10 other shareholders. Tenco’s shareholders made a deal to sell all of their shares to the Minute Maid Corporation. In exchange for their shares, the Tenco shareholders received a combination of cash, promissory notes, and Minute Maid common stock. Later, Minute Maid merged Tenco into the parent company, and Tenco ceased to exist as a distinct corporation. Although Minute Maid and the Tenco shareholders had not explicitly expressed their intent that this merger step take place, the intent could be clearly inferred. King Enterprises determined that the two steps should be stepped together and treated the integrated transaction as a tax-free reorganization. The Internal Revenue Service (IRS) (defendant) treated the sale of the Tenco shares and the later merger of Tenco into the Minute Maid parent company as two distinct transactions. King Enterprises sued to resolve the issue in the United States Court of Claims.

Rule of Law

Issue

Holding and Reasoning (Per curiam)

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