Court Opinion

ID: 6883383
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:21:42.832766+00
Date Added: 2024-06-11T16:05:38.964042
License: Public Domain

HUXMAN, Circuit Judge
(concurring specially).
It is my conclusion that the transaction falls within Sec. 112(b) (5) and is therefore exempt. The bondholders did transfer property to the new corporation in. exchange for its securities and they were in charge of the new corporation immediately after the exchange. Sec. 112(b) (5) therefore exempts them from the duty of reporting the transaction for income tax purposes at this time.
I cannot agree with the conclusion of the majority that the transaction is covered by Sec. 112(g) (1), Sec. 112(b) (3), and Sec. 112(g) (1) (C). In my view, neither the insolvency of the corporation, the deprecia*385tion of its assets to the point where they are insufficient to pay its obligations, nor even the fact that there is nothing left for the stockholders, results in a metamorphosis which changes a bondholder into a stockholder. Neither can I agree with the reasoning in Commissioner v. Kitselman. If it ever was the law, in my opinion it was overruled by the rationale of LeTulle v. Scofield, 308 U.S. 415, 60 S.Ct. 313, 84 L.Ed. 355.