SooperKanoon Citation | sooperkanoon.com/96761 |
Court | US Supreme Court |
Decided On | Jan-03-1938 |
Case Number | 302 U.S. 454 |
Appellant | Helvering |
Respondent | Bashford |
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' )include - APP/View/Case/amp.ctp, line 123 View::_evaluate() - CORE/Cake/View/View.php, line 971 View::_render() - CORE/Cake/View/View.php, line 933 View::render() - CORE/Cake/View/View.php, line 473 Controller::render() - CORE/Cake/Controller/Controller.php, line 963 Dispatcher::_invoke() - CORE/Cake/Routing/Dispatcher.php, line 200 Dispatcher::dispatch() - CORE/Cake/Routing/Dispatcher.php, line 167 [main] - APP/webroot/index.php, line 109
Notice (8): Undefined variable: query [APP/View/Case/amp.ctp, line 123]helvering v. bashford - 302 u.s. 454 (1938) u.s. supreme court helvering v. bashford, 302 u.s. 454 (1938) helvering v. bashford no. 33 argued october 21, 1937 reargued december 15, 1937 decided january 3, 1938 302 u.s. 454 certiorari to the circuit court of appeals for the third circuit syllabus the a corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the a corporation, and cash which the a corporation supplied. held, the a corporation was not a "party to.....Code Context}
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' )include - APP/View/Case/amp.ctp, line 123 View::_evaluate() - CORE/Cake/View/View.php, line 971 View::_render() - CORE/Cake/View/View.php, line 933 View::render() - CORE/Cake/View/View.php, line 473 Controller::render() - CORE/Cake/Controller/Controller.php, line 963 Dispatcher::_invoke() - CORE/Cake/Routing/Dispatcher.php, line 200 Dispatcher::dispatch() - CORE/Cake/Routing/Dispatcher.php, line 167 [main] - APP/webroot/index.php, line 109
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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Helvering v. Bashford
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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No. 33
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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Argued October 21, 1937
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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Reargued December 15, 1937
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. ', (int) 39 => ' <br/> <br/> </div></body></html>' ) $paragraphAfter = (int) 1 $cnt = (int) 40 $i = (int) 4include - APP/View/Case/amp.ctp, line 144 View::_evaluate() - CORE/Cake/View/View.php, line 971 View::_render() - CORE/Cake/View/View.php, line 933 View::render() - CORE/Cake/View/View.php, line 473 Controller::render() - CORE/Cake/Controller/Controller.php, line 963 Dispatcher::_invoke() - CORE/Cake/Routing/Dispatcher.php, line 200 Dispatcher::dispatch() - CORE/Cake/Routing/Dispatcher.php, line 167 [main] - APP/webroot/index.php, line 109
Decided January 3, 1938
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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302 U.S. 454
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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CERTIORARI TO THE CIRCUIT COURT OF APPEALS
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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FOR THE THIRD CIRCUIT
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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Syllabus
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. Held, the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following Groman v. Commissioner, ante, p. 302 U. S. 82 . P. 302 U. S. 458 .
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. ', (int) 39 => ' <br/> <br/> </div></body></html>' ) $paragraphAfter = (int) 1 $cnt = (int) 40 $i = (int) 11include - APP/View/Case/amp.ctp, line 144 View::_evaluate() - CORE/Cake/View/View.php, line 971 View::_render() - CORE/Cake/View/View.php, line 933 View::render() - CORE/Cake/View/View.php, line 473 Controller::render() - CORE/Cake/Controller/Controller.php, line 963 Dispatcher::_invoke() - CORE/Cake/Routing/Dispatcher.php, line 200 Dispatcher::dispatch() - CORE/Cake/Routing/Dispatcher.php, line 167 [main] - APP/webroot/index.php, line 109
87 F.2d 827 reversed.
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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Certiorari, 301 U. S. 78 , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10,
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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which reversed an order of the Commissioner assessing a deficiency in income tax.
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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MR. JUSTICE BRANDEIS delivered the opinion of the Court.
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company.
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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some common stock in the new company, some Atlas stock, and some cash which Atlas supplied.
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with Commissioner v. Groman, 86 F.2d 670, we granted certiorari in both cases.
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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In Groman v. Commissioner, ante, p. 302 U. S. 82 , we gave the following construction to the reorganization sections here involved:
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss."
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization,"
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization."
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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Bashford contends that there is a clear distinction in the facts between the case at bar and the Groman case which should lead to a different conclusion here. The differences mainly relied upon are these:
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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1. In the Groman case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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"not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) in the reorganization, but of all the other corporations (Peerless and Union) in the reorganization. "
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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"Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common."
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas."
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company."
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking.
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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MR. JUSTICE ROBERTS took no part in the consideration or decision of the case.
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed.
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$viewFile = '/home/legalcrystal/app/View/Case/amp.ctp' $dataForView = array( 'title_for_layout' => 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ', 'desc' => array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> . P. <span> <a href="/case/96762/leitch-mfg-co-vs-barber"> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a href="/case/96504/labor-board-vs-friedman-harry-marks-clothing-co#78"> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a class="page-number" id="455"> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a class="page-number" id="456"> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a href="/case/96460/groman-vs-commissioner"> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a class="page-number" id="457"> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a class="page-number" id="458"> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ), 'casename_url' => 'helvering-vs-bashford', 'args' => array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) ) $title_for_layout = 'Helvering Vs Bashford - Citation 96761 - Court Judgment | ' $desc = array( 'Judgement' => array( 'id' => '96761', 'acts' => null, 'appealno' => '302 U.S. 454', 'appellant' => 'Helvering', 'authreffered' => null, 'casename' => 'Helvering Vs. Bashford', 'casenote' => '', 'caseanalysis' => null, 'casesref' => null, 'citingcases' => null, 'counselplain' => null, 'counseldef' => null, 'court' => 'US Supreme Court', 'court_type' => 'FN', 'decidedon' => '1938-01-03', 'deposition' => null, 'favorof' => null, 'findings' => null, 'judge' => null, 'judgement' => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> </p> <p> <b> No. 33 </b> </p> <p> <b> Argued October 21, 1937 </b> </p> <p> <b> Reargued December 15, 1937 </b> </p> <p> <b> Decided January 3, 1938 </b> </p> <p> <b> 302 U.S. 454 </b> </p> <p> <b> </b> </p> <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> </p> <p> <em> FOR THE THIRD CIRCUIT </em> </p> <p> <em> </em> <em> Syllabus </em> </p> <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . </p> <p> 87 F.2d 827 reversed. </p> <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, </p> <p> <a> Page 302 U. S. 455 </a> </p> <p> which reversed an order of the Commissioner assessing a deficiency in income tax. </p> <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. </p> <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. </p> <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received </p> <p> <a> Page 302 U. S. 456 </a> </p> <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. </p> <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. </p> <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: </p> <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." </p> <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," </p> <p> <a> Page 302 U. S. 457 </a> </p> <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." </p> <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: </p> <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired </p> <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " </p> <p> 2. </p> <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." </p> <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." </p> <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." </p> <p> <a> Page 302 U. S. 458 </a> </p> <p> </p> <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. </p> <p> <em> Reversed. </em> </p> <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. </p> <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. </p> <br/> <br/> </div></body></html>', 'observations' => null, 'overruledby' => null, 'prhistory' => null, 'pubs' => null, 'ratiodecidendi' => null, 'respondent' => 'Bashford', 'sub' => null, 'link' => '/cases/federal/us/302/454/', 'circuit' => null ) ) $casename_url = 'helvering-vs-bashford' $args = array( (int) 0 => '96761', (int) 1 => 'helvering-vs-bashford' ) $url = 'https://sooperkanoon.com/case/amp/96761/helvering-vs-bashford' $ctype = '' $date = array( (int) 0 => 'Jan', (int) 1 => '03', (int) 2 => '1938' ) $content = array( (int) 0 => '<html><head></head><body><div> Helvering v. Bashford - 302 U.S. 454 (1938) <br/> <span> U.S. Supreme Court Helvering v. Bashford, 302 U.S. 454 (1938) </span> <p> <b> Helvering v. Bashford </b> ', (int) 1 => ' <p> <b> No. 33 </b> ', (int) 2 => ' <p> <b> Argued October 21, 1937 </b> ', (int) 3 => ' <p> <b> Reargued December 15, 1937 </b> ', (int) 4 => ' <p> <b> Decided January 3, 1938 </b> ', (int) 5 => ' <p> <b> 302 U.S. 454 </b> ', (int) 6 => ' <p> <b> </b> ', (int) 7 => ' <p> <em> CERTIORARI TO THE CIRCUIT COURT OF APPEALS </em> ', (int) 8 => ' <p> <em> FOR THE THIRD CIRCUIT </em> ', (int) 9 => ' <p> <em> </em> <em> Syllabus </em> ', (int) 10 => ' <p> The A corporation brought about a consolidation of three of its competitors into a new corporation, of which it became the owner of all the preferred shares and 57% of the common shares. Stockholders of the consolidated companies received, in exchange for their shares, shares of the new corporation, shares of the A corporation, and cash which the A corporation supplied. <em> Held, </em> the A corporation was not a "party to a reorganization" under § 112(b)(3) of the Revenue Act of 1928; its shares received by stockholders of the consolidated companies were "other property" under § 112(c)(1), and gain thereon was taxable. Following <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> . P. <span> <a> 302 U. S. 458 </a> </span> . ', (int) 11 => ' <p> 87 F.2d 827 reversed. ', (int) 12 => ' <p> Certiorari, <span> <a> 301 U. S. 78 </a> </span> , to review a judgment affirming a decision of the Board of Tax Appeals, 33 B.T.A. 10, ', (int) 13 => ' <p> <a> Page 302 U. S. 455 </a> ', (int) 14 => ' <p> which reversed an order of the Commissioner assessing a deficiency in income tax. ', (int) 15 => ' <p> MR. JUSTICE BRANDEIS delivered the opinion of the Court. ', (int) 16 => ' <p> Whether Bashford is liable for a deficiency in the income taxes assessed for the year 1930 depends upon whether Atlas Powder Company was, as defined by section 112(i)(2) of the Revenue Act of 1928, "a party to the reorganization" of the Peerless Explosives Company. ', (int) 17 => ' <p> Atlas Powder Company desired to eliminate the competition of three concerns -- Peerless Explosives Company, Union Explosives Company, and Black Diamond Powder Company. Deeming it unwise to do so by buying either their stock or their assets, Atlas conceived and consummated a plan for consolidating the three competitors into a new corporation, with Atlas to get a majority of its stock. To this end, holders of the stock of the three companies were duly approached by individuals who represented Atlas; their agreements to carry out the plan were obtained; the new corporation was formed and became the owner practically of all the stock, and all the assets, of the three competitors; Atlas became the owner of all the preferred stock and 57 percent. of the common stock of the new corporation, and, in exchange for the stock in the three companies, each of the former stockholders received ', (int) 18 => ' <p> <a> Page 302 U. S. 456 </a> ', (int) 19 => ' <p> some common stock in the new company, some Atlas stock, and some cash which Atlas supplied. ', (int) 20 => ' <p> Bashford, one of the stockholders in Peerless, received in exchange for his stock 2,720.08 shares of the common stock of the new corporation, $25,306.67 in cash, 625 shares of Atlas preferred, and 1,344 shares of Atlas common. In his income tax return for the year 1930, he included all the cash, but did not include the gain on stock of either the new corporation or Atlas. The Commissioner concedes that gain on the stock in the new corporation was properly omitted, since the new company was a "reorganization" of Peerless. He insists that the Atlas stock should have been included, as it was "other property" on which gain was taxable under § 112(c)(1) of the Revenue Act of 1928, since Atlas was not "a party to the reorganization." The Board of Tax Appeals, 33 B.T.A. 10, held that Atlas was "a party to the reorganization," and hence that gain on its stock was properly omitted by Bashford. The Circuit Court of Appeals for the Third Circuit affirmed that judgment. 87 F.2d 827. Because of alleged conflict of the decision with <em> Commissioner v. Groman, </em> 86 F.2d 670, we granted certiorari in both cases. ', (int) 21 => ' <p> In <em> Groman v. Commissioner, ante, </em> p. <span> <a> 302 U. S. 82 </a> </span> , we gave the following construction to the reorganization sections here involved: ', (int) 22 => ' <p> ". . . where, pursuant to a plan, the interest of the stockholders of a corporation continues to be definitely represented in substantial measure in a new or different one, then, to the extent, but only to the extent, of that continuity of interest, the exchange is to be treated as one not giving rise to present gain or loss." ', (int) 23 => ' <p> Applying the rule, we held there that the Glidden stock received by Groman was "other property," and he therefore liable on the deficiency assessment because the Glidden Company was not "a party to the reorganization," ', (int) 24 => ' <p> <a> Page 302 U. S. 457 </a> ', (int) 25 => ' <p> although it had, pursuant to agreement with the stockholders of the Indiana corporation, caused it to be reorganized as an Ohio corporation, had taken for itself all the common stock of Ohio, and had distributed among the former stockholders of Indiana the Ohio preferred stock and some Glidden stock, as well as cash, which it supplied. Applying the rule here, we hold likewise that the Atlas stock was "other property," and Bashford therefore liable on the deficiency assessment because the Atlas Powder Company was not "a party to the reorganization." ', (int) 26 => ' <p> Bashford contends that there is a clear distinction in the facts between the case at bar and the <em> Groman </em> case which should lead to a different conclusion here. The differences mainly relied upon are these: ', (int) 27 => ' <p> 1. In the <em> Groman </em> case, the court found that Glidden did not acquire a majority of the shares of the voting stock and a majority of the shares of all other classes of stock involved, whereas here the facts were as follows: Atlas acquired ', (int) 28 => ' <p> "not only a majority of the voting stock and a majority of the stock of all other classes of another corporation (the new company) <em> in the reorganization, </em> but of all the other corporations (Peerless and Union) <em> in the reorganization. </em> " ', (int) 29 => ' <p> 2. ', (int) 30 => ' <p> "Atlas acquired as part of the plan, substantially all of the shares of Peerless and Union in direct exchanges with the taxpayers and the other stockholders of those companies in part consideration for which it delivered to the shareholders 6,318 shares of Atlas preferred stock and 8,712 1/2 shares of common." ', (int) 31 => ' <p> 3. "Atlas, unlike Glidden was a party to all the exchanges, while the new company was a party only to exchanges with Atlas." ', (int) 32 => ' <p> 4. "The stockholders of Peerless and Union did not participate in the contract or exchange between Atlas and the new company." ', (int) 33 => ' <p> <a> Page 302 U. S. 458 </a> ', (int) 34 => ' <p> ', (int) 35 => ' <p> Any direct ownership by Atlas of Peerless, Black Diamond, and Union was transitory, and without real substance; it was part of a plan which contemplated the immediate transfer of the stock or the assets or both of the three reorganized companies to the new Atlas subsidiary. Hence, under the rule stated, the above distinctions are not of legal significance. The difference in the degree of stock control by the parent company of its subsidiary, and the difference in the method or means by which that control was secured, are not material. The participation of Atlas in the reorganization of its competitors into a new company which became a subsidiary did not make Atlas "a party to the reorganization." The continuity of interest required by the rule is lacking. ', (int) 36 => ' <p> <em> Reversed. </em> ', (int) 37 => ' <p> MR. JUSTICE ROBERTS took no part in the consideration or decision of the case. ', (int) 38 => ' <p> MR. JUSTICE McREYNOLDS, MR. JUSTICE SUTHERLAND, and MR. JUSTICE BUTLER are of opinion that the Board of Tax Appeals and the Circuit Court of Appeal, reached the right conclusion, and that the judgment below should be affirmed. 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