- 36 -
We also reject petitioners' contention that Bates Motor
Transp. Lines, Inc. v. Commissioner, 200 F.2d 20 (7th Cir. 1952),
and Hunn v. United States, 60 F.2d 430 (8th Cir. 1932), on which
respondent relies, do not support respondent's position in the
present case. In Bates Motor Transp. Lines, Inc. v. Commis-
sioner, supra at 24, Harry F. Chaddick (Mr. Chaddick) owned
around 64 percent of the stock of Bates Motor Transport Lines,
Inc. (Bates) and 100 percent of the stock of Standard Freight
Lines, Inc. (Standard) and was the president of both companies.
In form, Standard purchased all of the assets of Bates in ex-
change for Standard's assumption of the liabilities of Bates and
Standard's issuance of its stock to the stockholders of Bates,
including Mr. Chaddick. Id. at 22-23. One of the issues in
Bates Motor Transp. Lines, Inc. v. Commissioner, supra at 24-25,
was whether Mr. Chaddick was liable as a transferee of Bates.
The U.S. Court of Appeals for the Seventh Circuit (Court of
Appeals for the Seventh Circuit) held that he was. Id. at 25.
In so holding, the Court of Appeals for the Seventh Circuit found
that the substance of the transactions there involved was Bates'
sale of its assets to Standard in exchange for, inter alia,
Bates' receipt of the stock of Standard, which Bates transferred
as liquidating distributions to its stockholders, including Mr.
Chaddick. Id. The Court of Appeals for the Seventh Circuit,
id., quoted with approval the following conclusions of this Court
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