BUS & TRANSPORT SECURITIES CORP.
v.
HELVERING, COMMISSIONER OF INTERNAL REVENUE

U.S. | 1935-12-16
No. 490
296 U.S. 391 Supreme Court of the United States (1935) Caution
Also reported at: 80 L. Ed. 292 · 56 S. Ct. 277 · 1935 U.S. LEXIS 587 · SCDB 1935-045
Cited by 30 cases

AI-generated. These summaries, headnotes, and key points are machine-generated and may contain errors or omissions. Always verify against the full opinion text below. Not legal advice.

Synopsis

Bus and Transport Securities Corporation challenged an income tax deficiency assessment, claiming that its exchange of shares in two bus-operating corporations for shares in another corporation constituted a tax-free reorganization under the Internal Revenue Act of 1928. The Supreme Court affirmed the lower courts' rejection of this claim, holding that the transaction was merely a stock-for-stock exchange between unrelated parties rather than a reorganization, as the parties acquired no definite immediate interest in each other and the arrangement bore no resemblance to a merger or traditional reorganization.

© FLexlaw, Inc. — AI-generated enrichments are proprietary. All rights reserved.

Opinion of the Court
Mr. Justice McReynolds

Mr. Justice McReynolds delivered the opinion of the Court.

Petitioner — Bus and Transport Securities Corporation — challenges a deficiency income tax assessment for 1929, and says that the transaction from which the alleged taxable gain arose was reorganization within § 112, Rev. Act, 1928. Paragraphs (b) (4), (i) (1) and (i) (2) are specially relied upon.†

Jacobus owned practically all shares of two corporations, herein designated “A” and “ B,” which operated bus lines. The Public Service Corporation of New Jersey— the projector — desired to control these lines; and to that end engineered the following plan.

Public Service Coordinated Transport Company, affiliated with the projector, caused the organization of C. Easman Jacobus, Inc., took all the stock and paid therefor by transfering 2500 of the projector’s shares.

Jacobus caused petitioner to be organized and acquired all its stock in exchange for all shares of “A” and “ B ” corporations. Thereafter petitioner transferred to Public Service Coordinated Transport Company these “A” and “ B ” shares and took all shares of C. Easman Jacobus, Inc. Thus, petitioner, through Jacobus, Inc., came to control 2500 of the projector’s shares. And Public Service Coordinated Transport Company became owner of all shares of “A” and “ B ” corporations. Through these manipulations, the projector obtained indirect control of corporations “A” and “ B ” and the lines which they operate.

The Commissioner, the Board of Tax Appeals, and the Circuit Court of Appeals all rightly concluded that petitioner was not party to a reorganization within the statute. Certain corporate shares owned by it were exchanged for shares which another corporation owned. Neither party to the exchange acquired any definite immediate interest in the other. Nothing here, we think, even remotely resembles either merger or reorganization as commonly understood. Pinellas Ice Co. v. Commissioner, 287 U. S. 462.

The challenged judgment must be

Affirmed.

†

Margin of opinion in Helvering v. Minnesota Tea Co., ante, p. 378.

Cases With Similar Vibessemantic neighbors from the corpus

Citator

Cited By

  • Schuh Trading Co. v. Commissioner of Internal Revenue, 95 F.2d 404 (7th Cir. 1938)
    …owise detracts from the fact that McKesson & -Robbins contracted to receive and did in fact receive through its nominee that which it contracted for. In this respect the case is to be distinguished from Bus & Transport Securities Corp. v. Helvering, 296 U.S. 391, 56 S.Ct. 277, 80 L.Ed. 292, and Groman v. Commissioner, supra, relied upon by the Commissioner. In the former, neither party to the exchange required any definite immediate interest in the other, and in the latter, Glidden transferred nothing to th…
  • Miller v. Commissioner of Internal Revenue, 84 F.2d 415 (6th Cir. 1936)
    …. Minnesota Tea Co., 296 U.S. 378, 56 S.Ct. 269, 272, 80 L.Ed. 284; Helvering v. Watts, 296 U.S. 387, 56 S.Ct. 275, 80 L.Ed. 289; G. & K. Mfg. Co. v. Helvering, 296 U.S. 389, 56 S.Ct. 276, 80 L.Ed. 291; Bus & Transport Securities Corp. v. Helvering, 296 U.S. 391, 56 S.Ct. 277, 80 L.Ed. 292. The opinion in the Minnesota Tea Company Case more or less controls the whole series. There, after quoting the excerpt above recited from the Pinellas Case, the court said: “And we now add that this interest must be defi…
  • REX MFG. Co., Inc. v. Commissioner of Internal Revenue, 102 F.2d 325 (7th Cir. 1939)
    …on.” Helvering v. Minnesota Tea Co., 296 U.S. 378, 56 S.Ct. 269, 80 L.Ed. 284; Nelson Co. v. Helvering, 296 U.S. 374, 56 S.Ct. 273, 80 L.Ed. 281; Helvering v. Watts, 296 U.S. 387, 56 S.Ct. 275, 80 L.Ed. 289; Bus & Transport Sec. Corp. v. Helvering, 296 U.S. 391, 56 S.Ct. 277, 80 L.Ed. 292; Pinellas Ice & Cold Storage Co. v. Commissioner, 287 U.S. 462, 53 S.Ct. 257, 77 L.Ed. 428; G. & K. Mfg. Co. v. Helvering, 296 U.S. 389, 56 S.Ct. 276, 80 L.Ed. 291; Groman v. Commissioner, 302 U.S. 82, 58 S.Ct. 108, 82 L.…

Previewing 3 of 8 citing cases — full citator treatment, depth of discussion, and citing context are member features.

Join FLexlaw to unlock all legal intelligence

Authorities Cited

Full citator, related cases, and AI research tools

Open in FLexlaw