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brought to our attention is Bloomington Coca-Cola Bottling Co. v.
Commissioner, 189 F.2d 14 (7th Cir. 1951), affg. a Memorandum
Opinion of this Court dated Aug. 10, 1950. Petitioners try to
distinguish the Bloomington Coca-Cola Bottling Co. case, but we
find it highly instructive.
The taxpayer had originally reported the transaction in
issue as a sale at a loss in the year it occurred, 1939, but
contended--for 1943 and 1944 excess profits tax purposes--that
the transaction had been an exchange under the statutory
predecessor of section 1031(a) in which no loss had been
recognized. The taxpayer’s change in position was attributable
to its desire not to reduce its excess profits tax base.
The taxpayer had outgrown its old bottling plant and hired a
contractor to erect a new plant, on the taxpayer’s land, at an
agreed cost of $72,500. Included in the consideration paid by
the taxpayer to the contractor was the old bottling plant and the
parcel of land on which it was located, at an agreed value of
$8,000, plus cash of $64,500. The taxpayer reported on its 1939
income tax return a loss of approximately $23,000 on the sale of
the old plant.
As this Court pointed out in its Memorandum Opinion: “Here
the contractor was not the owner of the land upon which the new
building was constructed, never owned the new building, and never
conveyed the new building to the petitioner”.
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