Case Name: Harry E. Collin, Petitioner, v. Commissioner of Internal Revenue, Respondent
Court: United States Board of Tax Appeals
Jurisdiction: United States
Decision Date: 1927-09-01
Citations: 7 B.T.A. 1217
Docket Number: Docket No. 9273
Parties: Harry E. Collin, Petitioner, v. Commissioner of Internal Revenue, Respondent.
Judges: Smith did not participate.
Reporter: Reports of the United States Board of Tax Appeals
Volume: 7
Pages: 1217–1219

Head Matter:
Harry E. Collin, Petitioner, v. Commissioner of Internal Revenue, Respondent.
Docket No. 9273.
Promulgated September 1, 1927.
Harry J. Gerrity, Esq., Thomas O. Marlar, Esq., and L. T. Kono-fah, O. P. A., for the petitioner.
Harold Allen, Esq., for the respondent.

Opinion:
OPINION.
Aeundell :
The facts set forth in the findings were stipulated. The petitioner's position is that it is impossible to segregate the cost of the preferred and common stock acquired in 1918 and thereafter sold in part and consequently no income is realized until there has been a complete recovery of the cost. It is urged that the Commissioner has failed to follow his own regulations as they appear in article 39 of Regulations 45, the pertinent part of which article reads as follows:
Where common stock is received as a bonus with the purchase of preferred stock or bonds, the total purchase price shall be fairly apportioned between the stock and seeurtities purchased for the purpose of determining the portion of the consideration attributable to each class of stock or. securities and so representing its cost, but if that should be impracticable in any case, no profit on any subsequent sale of any part of the stock or securities will be realized until out of the proceeds of sales shall have been recovered the total cost.
It is true that the Commissioner has assigned the entire cost to the preferred stock, but we can not. say that his action in so doing is arbitrary. The Ohio Commissioner of Securities had directed that the stock be issued only in units of one share of preferred and two shares of common and had refused to sanction the transaction whereby petitioner was to receive 100,000 shares of common stock, pursuant to the original agreement between the National Dairy Co. on the one hand and Edwards and Ford on the other. As a result of the position taken by the Securities Commissioner of Ohio,.30,00G shares were surrendered to the National Dairy Co. by petitioner and this action was taken by him without in any way altering the price theretofore agreed upon.
That the common stock was offered as a bonus and its value, if any, was highly speculative and entirely prospective is clear from the record. The petitioner affords us no help in determining what value this stock may have, but contents himself with saying that a segregation can not be made. We are not persuaded by his argument. On the facts as they appear in this case we believe that the Commissioner's segregation of cost was reasonable and it will not be disturbed.
Reviewed by the Board.
Judgment will be entered for the respondent.
Smith did not participate.