Helvering v. Ward
Decision Date | 20 September 1935 |
Docket Number | No. 10226-10230.,10226-10230. |
Parties | HELVERING, Com'r of Internal Revenue, v. WARD (and four other cases). |
Court | U.S. Court of Appeals — Eighth Circuit |
James W. Morris, Sp. Asst. to Atty. Gen. , for petitioner.
Joseph N. Moonan, of Waseca, Minn., and Francis D. Butler, of St. Paul, Minn. (Ray G. Moonan, of Waseca, Minn., on the brief), for respondent.
Before STONE, WOODROUGH, and BOOTH, Circuit Judges.
This is a petition to review a decision of the Board of Tax Appeals reducing a tax deficiency for the year 1929 as determined by the Commissioner.
In 1929, the taxpayer was a holder of common and of preferred stock in the Ward Dry Milk Company. In that year, an exchange of all of the stock of the Ward Company was made for 18,750 shares of the common stock of the Kraft-Phenix Cheese Company; 2,525 of such shares being for all of the preferred stock of the Ward Company. This exchange was under a written contract (dated June 1, 1929) containing provisions providing for immediate transfer of the Ward stock and of control of the Ward Company to Kraft-Phenix; for delivery of the Kraft-Phenix stock "from the unissued stock of said Kraft-Phenix as soon as the same may be approved by the New York Stock Exchange" (which approval, Kraft-Phenix agreed to secure as speedily as possible). Two other provisions give rise to the issue here. They are as follows:
The only issue is whether, under the above provisions and what was done thereunder, this exchange of stock and this repurchase of part thereof were separate transactions (1 an exchange of stock and 2 an option to sell), or only one transaction (an exchange of Ward stock for Kraft-Phenix stock and cash). The Commissioner contends it is the latter and, therefore, that the cash may be taxed as gain under the Revenue Act of 1928 (45 Stat. 791, 816) section 112 (a), (b) (3) and (c) (1), 26 USCA § 2112 (a), (b) (3), (c), and Departmental Regulations 74, Art. 574 and Art. 575.
In limine, we meet the contention of the taxpayer that the issue here is purely one of fact and since the record before us contains none of the evidence before the Board this court must affirm the decision of the Board. Petitioner properly concedes that whether this transaction was single or dual, in the respect here involved, "is primarily a question of fact." Even the very existence of the contract is denied in the answer of the Commissioner and was a matter for proof. Also, it is material to know the purposes of the parties in making the contract, the circumstances surrounding and influencing them at that time and later, and what was done by them under it. We have been much enlightened as to all of these matters by the opinion of the Board and by the oral argument here but not one word of the evidence before the Board is in the record here.
Our jurisdiction in proceedings to review the determinations of the Board of Tax Appeals is purely statutory and the limits thereof as to matters of fact have been repeatedly stated by the courts. A very recent utterance by the Supreme Court (Helvering v. Rankin, 295 U. S. 123, 131, 55 S. Ct. 732, 736, 79 L. Ed. ___) is typical and is as follows: ...
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