Holly Development Co. v. Commissioner

Involved herein are deficiencies in income taxes for the years 1923, 1924 and 1925, determined by the Board of Tax Appeals to be in the amounts of $23,515.40 $216.10 and $76,235.45, respectively, and the case is brought before us by petitions to review the decision of the Board.

The facts were found to be as follows:

About November 1, 1922, S. W. Sinsheimer, having been informed by a representative that the Argonaut Oil Company of San Francisco, the owner of valuable oil leases, was in financial difficulties and that it was possible that its properties might be acquired under advantageous terms, contacted the officers of Argonaut, and found that it was deeply in debt with the possibility of forfeiting some of its leases.

On November 24, 1922, an agreement was entered into between Argonaut and Sinsheimer, which was supplemented by an explanatory agreement on December 29, 1922. The agreements provided that Argonaut, in consideration of $10 and the covenants, granted, sold, assigned and transferred to Sinsheimer certain oil leases subject to the terms contained therein, together with all buildings, improvements, machinery and equipment and other personal property of Argonaut, for…