Schweitzer & Conrad, Inc. v. Commissioner
United States Tax Court
41 B.T.A. 533 (1940)

- Written by Kelly Simon, JD
Facts
In 1930, Schweitzer & Conrad, Inc. (Illinois), Edmund Schweitzer, Nicholas Conrad, and Cutler-Hammer, Inc. entered into a contract for the assets of Illinois to be acquired and reorganized in a (C) reorganization under which the shareholders of Illinois would recognize a gain. The newly reorganized company, also named Schweitzer & Conrad, Inc. (New Schweitzer & Conrad) (plaintiff), filed its tax return and used the amount of gain recognized by the Illinois shareholders as the basis of New Schweitzer & Conrad’s investment in Illinois’ assets. The Commissioner of Internal Revenue (the commissioner) (defendant) determined that New Schweitzer & Conrad was deficient in its taxes paid because the basis must be the cost of the assets to Illinois. The commissioner contended that New Schweitzer & Conrad may not inflate its basis by the amount of taxable gain realized by the Illinois shareholders. New Schweitzer & Conrad filed a lawsuit with the United States Tax Court to challenge the deficiency.
Rule of Law
Issue
Holding and Reasoning (Mellott, J.)
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