Mortimer A. Kline v. Commissioner of Internal Revenue, Gordon Oil Company v. Commissioner of Internal Revenue

These are petitions by Gordon Oil Company, a California corporation, and Mortimer A. Kline to review decisions of the Tax Court. We consolidated the petitions for hearing and decision. The Tax Court upheld determinations by the respondent that Gordon Oil Company owed deficiencies in income and excess profits taxes for the period January 1, 1951 to August 31, 1951 in the amount of $46,-256.88 and that Kline, as the transferee of the assets of Gordon Oil Company, was liable for such deficiencies. The controversy arises out of the following facts, which are not in dispute.

Gordon Oil Company on March 22, 1949 acquired two undeveloped oil and gas leases in the Placerita Field in Los Angeles County, California. Thereafter the company drilled and equipped 29 producing wells on the leaseholds. Between March and May 1951 Kline purchased for his own account all of the outstanding stock of Gordon Oil Company for $3,962,-432.54. He financed the purchase by a loan from the First National Bank in Dallas, Texas, and pledged all the stock as collateral security for the loan. After the purchase Kline took control of Gordon Oil Company and became a director and •president of the company.

Kline…