¶1dissenting: I think the reasoning of the prevailing opinion upon the first point is unsound in that it fails to consider the correct method of determining the basis to which the petitioner is entitled. The petitioner acquired 5,000 shares of $100 par common of the American Chain Co. for $125,000 by purchase on December 31, 1915. He acquired another 5,000 shares of the same stock, together with 20,000 shares of preferred, on January 3, 1916, by transferring certain property to the American Chain Co. in exchange for the shares. The cost and basis for these shares was the fair market value of the property exchanged for them. That cost should be allocated between the common and preferred in proportion to the total fair market value of each received. The part allocated to the preferred is not used further in the present computation. The part allocated to the common, together with $125,000, the cost of the first 5,000 shares, forms the total basis of the 100,000 no par shares which the petitioner exchanged in 1923. It may be that the record does not show all of the values necessary to this computation. In that event the result reached in the prevailing opinion may be proper, because the Commissioner seems to concede that the basis of the 100,000 shares should be at least $1,000,000.
34 B.T.A. 768
Lashar v. Commissioner
United States Board of Tax Appeals
Decided July 10, 1936
United States Board of Tax Appeals · decided 1936-07-10
1. In the recapitalization of a corporation in 1923 the petitioner received 125,000 shares of class A stock and 250,000 shares of new no par common stock in exchange for 100,000 shares of old no par… Held: that the basis for computing gain or loss on the sale is the cost of the 100,000 shares of old no par common stock properly apportioned to the shares sold. 2. The petitioner had in his employ E. F. von Wettberg.
Cited by 2 later decisions — most recently June 1985
Good law ✅— No negative treatment on recordhow we know
Decided 1936-07-10
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