Donald DeCleene and Doris DeCleene - Page 26




                                       - 26 -                                         

          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”.                               





Page:  Previous  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  Next

Last modified: May 25, 2011