United States Supreme Court Cases & Opinions

U.S. Supreme Court

Groman v. Commissioner, 302 U.S. 82 (1937)

Groman v. Commissioner or Internal Revenue

No. 21

Argued October 21, 22, 1937

Decided November 8, 1937

302 U.S. 82

Syllabus

1. Section 112(i)(2) of the Revenue Act of 1928 declaring that the term party to a reorganization "includes" a corporation resulting from a reorganization, and both corporations when one acquires specified proportions of stock of another, is not an exclusive definition, but rather is intended to enlarge the meaning of the term beyond its ordinary connotation. P. 302 U. S. 85.

2. Pursuant to an agreement between a corporation (G) and shareholders of another corporation (I): -- G formed a new corporation (O), subscribing for its common stock and paying for it with cash and G's own preference shares; I's shareholders sold their shares to O and received from O a consideration made up of preference shares of G, and of O and cash; I then transferred its assets to O, and was dissolved. Held that G was not "a party" to the reorganization, and that the shares of G's preference stock received by I shareholders from O were a basis for computing taxable gain. Revenue Act of 1928, § 112. P. 302 U. S. 88.

86 F.2d 670 affirmed.

Certiorari, 301 U.S. 677, to review a judgment overruling an order of the Board of Tax Appeals and sustaining an income tax deficiency assessment.

Page 302 U. S. 83