Court Opinion

ID: 9453200
Source: CourtListenerOpinion
Date Created: 2023-08-04 18:06:32.450549+00
Date Added: 2024-06-11T17:33:33.822501
License: Public Domain

SEITZ, Circuit Judge
(concurring in part, dissenting in part).
I agree with so much of the per curiam opinion as decides that the petitioner’s losses incurred prior to Hyman’s acquisition of all of its stock were not deductible because of Section 269. I can*477not agree with its further conclusion that Section 269 does not bar the petitioner’s use for tax purposes of what are denominated as its “post acquisition” losses. These losses were incurred by-petitioner between the date Hyman purchased all of petitioner’s stock and the date approximately seven months later, when petitioner acquired all the assets of a profitably operated corporation whose stock was wholly owned by Hyman. This latter stock was owned by Hyman when he purchased petitioner’s stock.
The opinion of the Tax Court in this matter (T.C.Memo.1966-277) shows that it viewed the acquisition of the assets as a vital part of a plan to secure the benefit of the petitioner’s losses. Such being the case, I believe Section 269 must be applied to the facts as of the date the petitioner acquired the assets of Hyman’s profitable corporation. I think our factual situation renders applicable the following language of the Second Circuit dealing with Section 269(a) (1) in J. T. Slocomb Co. v. C. I. R., 334 F.2d 269, 274 (1964):
“* * * Preliminarily, we note that, in this case, the acquisition itself would not have produced any tax benefit to the acquiring shareholders. The further step of merging Slocomb, Green and Turbo was necessary to permit Slocomb’s pre-acquisition losses to offset future Green and Turbo profits. However, it seems clear that if the merger was an integral component of the entire plan, we may look to the end result and determine the issues from the factual situation which existed then. The Tax Court’s opinion considers the two transactions as integral steps of a single plan, and petitioner does not challenge this approach.”
Since, in my opinion, we are not here dealing with the petitioner’s tax returns for any period beyond the seven months in question, I do not consider the rule applicable to so-called true post acquisition losses.
I would affirm the Tax Court.