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$5,000 cash, $18,509 accounts receivable, and work in process
valued at $10,800, which they claim were transferred by WIS to
SPS at the time of SPS’s formation. There is adequate evidence
in the record to confirm that WIS transferred $23,509 of cash and
accounts receivable to SPS in December 1991, and transferred an
additional $7,138 of accounts receivable at the beginning of
1992, for a total investment of $30,647.
Petitioners claim the total value of the WIS contribution to
SPS as the basis of petitioner’s SPS stock, on the ground that
his wholly owned corporation was the source of all property
contributed and the contributions were made on his behalf.
Respondent, on the other hand, contends that petitioner acquired
no basis in SPS by reason of any transfers from WIS. Although
respondent does not articulate the legal theory behind this
position, the reason respondent gives is that petitioner failed
to demonstrate that he had any remaining basis in WIS at the
times of the alleged transfers from WIS to SPS.
Based largely on petitioner’s uncontroverted testimony, the
salient facts of the business reincorporation transaction may be
summarized as follows: All the stock of SPS was issued in 1992
in exchange for property transferred by WIS during December 1991
and January 1992; petitioner’s business associates, Lewis and
Tate, received two-thirds of SPS’s stock; the transfers of
property by WIS to SPS were made on petitioner’s behalf and not
made in satisfaction of any liabilities of WIS to Lewis and Tate.
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