Court Opinion

ID: 8944134
Source: CourtListenerOpinion
Date Created: 2022-11-27 08:14:28.777495+00
Date Added: 2024-06-11T17:09:48.720328
License: Public Domain

HANSON, Senior District Judge,
dissenting.
I must dissent to section II of the Court’s opinion. The majority opinion scorns Corn Products and its progeny as fostering uncertainty in taxpayers’ motivations in purchasing capital stock, favoring instead a return to the literal meaning of section 1221. The majority therefore falls in line with those critical of all Corn Products has wrought.
It appears to me, however, that Corn Products was merely an attempt to divine congressional intent. As such, it is a compelling rejoinder to those who believe “that legislative draftsmen and the tax-writing committees of the Congress are the most desirable forum for illuminating a subject matter they themselves made obscure and *222interminable.” Javaras, Corporate Capital Gains and Losses — The Corn Products Doctrine, 52 Taxes 770, 794 (1974).
After it announced in 1971 that it would divest its Bank holdings, Arkansas Best was compelled to infuse capital into the Bank in order to preserve its equity in the Bank. It is therefore apparent that, consistent with Corn Products, the stock was purchased as an integral and necessary act in the conduct of Arkansas Best’s business as a holding company. See Booth Newspapers, Inc. v. United States, 303 F.2d 916, 921 (Ct.Cl.1962).
Nor am I convinced that this Circuit has in the past narrowly construed Corn Products. Municipal Bond Corp. v. Commissioner, 341 F.2d 683 (8th Cir.1965), specifically did not narrow Corn Products, but rather dealt only with the plain meaning of the unambiguous word “primarily.” Id. at 688. In addition, M.F.A. Central Cooperative v. Bookwalter, 427 F.2d 1341 (8th Cir.1970), cert. denied, 405 U.S. 1045, 92 S.Ct. 1303, 31 L.Ed.2d 588 (1972), cannot support the majority’s conclusion that this, Circuit follows the plain meaning of section 1221 in all cases. Indeed, the focus in M.F.A. Cooperative had to do with stock which at no point could be said to have been worthless; rather, the Court found dispositive the fact that the stock had substantial value. Id. at 1343-44. There can be no doubt that in this case purchases after 1972 were at a substantial loss, and were an attempt to avoid liquidation of the Bank and to preserve the insurance license of its subsidiary, Universal.
I therefore would hold that Arkansas Best was entitled to ordinary loss treatment on its purchase of stock after 1972.