Document: 368 U.S. 337 82 S.Ct. 353 7 L.Ed.2d 326 Grover D. TURNBOW and Ruth H. Turnbow, Petitioners,v.COMMISSIONER OF INTERNAL REVENUE. No. 60. Argued Nov. 15 16, 1961. Decided Dec. 18, Francis N. Marshall, San Francisco, Cal., for the petitioners. Wayne G. Barnett, Washington, D.C., respondent. Mr. Justice WHITTAKER delivered opinion of Court. 1 This case involves turns on proper interpretation interaction §§ 112(g)(1)(B), 112(b)(3) 112(c)(1) Internal Revenue Code 1939.1 Specifically question presented is whether, in absence a 'reorganization,' as that term defined § 112(g)(1)(B) used 112(b)(3), gain an exchange stock plus cash to be recognized full, or, because provisions 112(c)(1), only extent cash. 2 The facts are simple undisputed. Petitioner2 owned all 5,000 shares outstanding International Dairy Supply Company ('International'), Nevada corporation. In 1952, petitioner transferred Foremost Dairies, Inc. ('Foremost'), New York corporation, 82,375 (a minor percentage) Foremost's common (voting) fair market value $15 per share or $1,235,625 amount $3,000,000. Petitioner's basis was $50,000, his expenses connection with transfer were $21,933.06. Petitioner therefore received property money exceeding by $4,163,691.94. 3 income tax return treated recognizable he received. Commissioner concluded whole accordingly proposed deficiency. On Taxpayer's petition redetermination, Tax Court, following its earlier decision Bonham v. Commissioner, 33 B.T.A. 1100, 1104,3 Seventh Circuit Howard Revenue, 238 F.2d 943, 948,4 held 32 T.C. 646. Commissioner's appeal, Ninth disagreed Court Circuit's case, supra, reversed. 286 669. To resolve this conflict, matter importance uniform application laws, we granted certiorari. 366 923, 81 1349, 6 383. 4 Because arbitrary technical character, somewhat 'hodgepodge' form, statutes involved, problem prosented highly complicated; although both parties rely upon 'plain words' these statutes, they arrive at diametrically opposed conclusions. That plausible arguments can have been made support each conclusion must admitted; and, might expected, hardly lightened our inescapable burden decision. 5 starting point analysis 'General rule' stated 112(a). It provides: rule. Upon sale entire loss * shall recognized, except hereinafter provided section.' Various exceptions, deaing exchanges solely kind, subsections (b)(1) through (b)(6).5 exception claimed relevant here contained subsection (b)(3). 'Stock reorganization. No if securities corporation party reorganization are, pursuance plan reorganization, exchanged such another reorganization.' 8 By definition, 'reorganization' means 'the acquisition one part voting stock, least 80 centum corporation.'6 (Emphasis added.) type commonly called '(B) 9 There no dispute between about fact transaction involved not by' 'in stock,' but partly Helvering Southwest Consolidated Corp., 315 194, 62 546, 86 L.Ed. 789. Nor there any actually within terms 'stock reorganization,' (a) nor 'for (which was) 10 But contends authorizes indulging assumptions, contrary actual facts, hypothetically supply missing elements necessary make whether so. Section 11 'Gains from kind. (1) If would (b)(1), (2), (3), (5), (1), section it consists permitted paragraph (l) without recognition gain, also other money, then any, recipient excess sum property.' 12 Centering section, supra,7 argues 'if (he) (the) exchange' consisted stock—'property (by 112(b)(3)) (if which reorganization) gain'—but cash, because, stock'; inasmuch hence 'would (have been) (b) (3),' received' 'not of' 'but money,' assumption, respects received, precludes money' 13 cannot agree 112(b)(3). indulge assumption permit negation Congress' carefully composed definition use those subsections, nonrecognition gains what reality, sales, full immediately taxed under general rule contrary, think 112(g)(1) exist before apply thereto. We agreed 'property (subsection 112) gain' 'other money.' And clear (§ is) Since, admitted, none met description, gain,' does postpone petitioner's stock.8 14 This, course, say purpose function. unless some part, least, meets particular description applicable Code. But, 112(g) (1)(B) defines mean corporation,' cash—approximately 30 70 cash—for 'at corporation' reorganization' required thus transaction. holding determines decide. Collaterally, 'loopholes' will opened sections adopted. answers Inasmuch said decides need occasion follow into, decide, collateral questions. 16 Affirmed. 17 HARLAN concurs result. Unless otherwise stated, references 1939 (26 U.S.C., 1952 ed.), 26 U.S.C.A. Turnbow referred though sole petitioner, wife being joint filed. 'that 'solely' requirement (B) fallen supra 948. Therefore, may (the received).' T.C., 652—653. acquiring obtained 80.19% acquired transferring holders, including petitioners, their remaining 19.81% corporation's holders price As petitioners determined realized should 112(a) Circuit, Court's 789, payment, fails meet Hence fall ambit 112(b)(3).' 947. turning relying others than petitioners) Binkley, scope 'boot' 112(c)(1). However, taxpayers question, consequence thereof, time ever arose.' various respecting contemplated 112(b), following: 112(b)(1): tangible property, productive investment, ' like kind.' 112(b)(2): same 112(b)(3): 112(g)(1), 112(b)(4): 'property,' 112(b)(5): controlled 112(b)(6): receipt complete liquidation See 112(l) provides similar respect to: successor pursuant court-approved debtor insolvency proceedings. '(g) Definition *— '(1) (A) statutory merger consolidation, total number classes (C) substantially properties determining liability other, subject liability, disregarded, (D) assets after transferor shareholders control transferred, (E) recapitalization, (F) mere change identity, place organization, however effected.' note 4. legislative history, much set forth Appeals, tending decision, inconclusive, more fairly Regulations. Treas.Reg. 118, 39.112(c)—1(e), 39.112(g)—4, 39.112(g)—1(c).

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