Court Opinion

ID: 4483909
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:16:22.868228+00
Date Added: 2024-06-11T14:53:45.362259
License: Public Domain

Scott, J., concurring: While I agree with the result in this case, I do not agree that Howard v. Commissioner, 24 T.C. 792 (1955), revd. on another issue 238 F.2d 943 (7th Cir. 1956), is distinguishable. In my view, the majority does not follow the Howard case even though it is not so stated. In our Howard opinion at pages 798-799, we specifically found that: The consideration for the entire 4,615 shares of Binkley was $1,846,000, of which $366,000 was payable in cash and $1,480,000 by the issuance of said 118,400 shares of the Truax-Traer common stock at $12.50 per share * * * In that opinion we held that the transaction was a part of an entire acquisition, stating at page 802: each element and term of the plan and agreement as originated, outlined, and consummated was inseparably interrelated, and designed to accomplish but one purpose, the acquisition by Truax-Traer of * * * Binkley * * * [T]here can be no doubt that petitioners did not take part in an exchange of some Binkley stock for stock of Truax-Traer and a separate and unrelated sale of other shares of Binkley stock * * * to Truax-Traer. Following the above-quoted conclusion in the Howard case, we stated the taxpayers’ main contention to be (at page 803): that the acquisition by one corporation of at least 80 per cent of the only class of stock outstanding of another corporation for stock is an acquisition “solely” for stock * * * and qualifies as a tax-free exchange * * * regardless of other consideration given by the transferee corporation for additional stock in excess of the minimum requirement of 80 per cent. It was this contention of the taxpayers we did not accept in Howard. In the present case, the majority states that petitioners raised two issues, the first of which was that the cash purchases by petitioner of Hartford stock were not part of the plan, and the second, that the cash purchases should, in any event, not be counted since the acquisition of Hartford stock for ITT stock “standing by itself” constituted a (B) reorganization because only ITT voting stock was exchanged for Hartford stock in one transaction, with over 80 percent of the Hartford stock being acquired in that exchange. The majority did not decide the first issue but based its decision on the second issue. Under these circumstances, in my view, whether the cash acquisition was made at the same time as the stock-for-stock acquisition is not a valid distinction between the Howard case and the instant case. I would refuse to follow our prior decision in Howard v. Commissioner, supra. This would remove any doubt as to our present position. In my view, where 80 percent of the stock of an acquired corporation is acquired solely for voting stock of the acquiring corporation in a single transaction, the requirements of sections 368(a)(1)(B) and 368(c), I.R.C. 1954, are met whether other stock is acquired for cash before, at the same time, or after the stock for stock transaction. Irwin, /., agrees with this concurring opinion.