Harbor Plywood Corp. v. Commissioner

This is a petition to review a decision of the Board of Tax Appeals in three consolidated cases, sustaining determinations of income tax deficiencies against petitioner for the years 1933, 1934 and 1935. The question in each case was as to the proper basis on which to compute claims for depreciation and from loss resulting from the sale of certain assets.

Petitioner is a Delaware corporation with its principal place of business in the state of Washington. Between November 20 and December 18, 1929, it acquired either all the stock or all the assets of seven other companies: John A. Gauger & Co., Durable Door Co., Knox & Toombs, Inc., American Door & Mfg. Co., George L. Waetjen & Co., Chicago’Veneer Co., and R. C. Clark Veneer Co. The first three were paid solely in preferred stock of petitioner; American Door & Mfg. Co. was paid solely in cash and the remaining three received *781 both cash and preferred stock. Most of the cash required was secured by issuance of petitioner’s preferred and common stock to A. G. Becker & Co., a corporation, which was acting as agent for its subsidiary Metropolitan Industries. The Board of Tax Appeals found that all the foregoing constituted a…

(dissenting in part and concurring in part).

I dissent so far as this case concerns the taxpayer’s claimed deductions for depreciation on the hssets other than those acquired from George L. Waetjen & Co. Since these deductions were disallowed by the Commissioner the burden is upon the taxpayer “to point to an applicable statute and show that he comes within its terms.” New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440 , 54 S.Ct. 788, 790 , 78 L.Ed. 1348 .

Taxpayer’s petition states .its burden with respect to the matters first decided in the majority opinion. Its petition to the Tax Court shows it to be that the Commissioner erred “In holding, contrary to the law and the evidence, that the evidence does not support a finding that the shares received by the four, corporations, John A. -Gauger & Company,. Knox & Toombs, Inc., Durable Door Company and Metropolitan Industries, were not substantially in proporation to the assets and money which they exchanged for them.’.’

On this the Tax Court found that “It is sufficient, however, to say that the evidence does not support a finding that the shares received by the four corporations Gauger, Knox & Toombs, Durable Door and…