Bazley v. Commissioner of Internal Revenue (331 U.S. 737)
U.S. Supreme Court · decided June 16, 1947 · Supreme Court Database (Spaeth)
- Citation
- 331 U.S. 737 · 67 S. Ct. 1489
- Docket
- No. 287
- Argued
- January 9, 1947
- Decided
- June 16, 1947
- Term
- October Term 1946
- Vote
- 7–2
- Majority author
- Justice Frankfurter
- Issue area
- Federal Taxation
- Disposition
- Affirmed
- Outcome
- Petitioning party lost
- Ideological direction
- Liberal
How the Justices voted
- Majority
- Chief Justice Vinson, Justice R. H. Jackson, Justice Frankfurter (wrote), Justice Reed, Justice Black, Justice Rutledge, Justice Murphy
- Dissenting
- Justice Burton (wrote), Justice Douglas (wrote)
Opinion excerpt
Mr. Justice Frankfurter delivered the opinion of the Court. The proper construction of provisions of the Internal Revenue Code relating to corporate reorganizations is involved in. both these cases. Their importance to the Treasury as well as to corporate enterprise led us to grant certiorari, 329 U. S. 695, 329 U. S. 701. While there are differences in detail to which we shall refer, the two cases may be disposed of in one opinion. In the Bazley case, No. 287, the Commissioner of Internal Revenue assessed an income tax deficiency against the taxpayer for the year 1939. Its validity depends on the legal significance of the recapitalization in that year of a family corporation in which the taxpayer and his wife owned all but one of the Company’s one thousand shares. These had a par value of $100. Under the plan of reorganization the taxpayer, his wife, and the holder of the additional share were to turn in their old shares and receive in exchange for each old share five new shares of no par value, but of a stated value of $60, and new debenture bonds, having a total face value of $400,000, payable in ten years but callable at any time. Accordingly, the taxpayer received 3,990 shares of the new stock for the 798 shares of his old holding and debentures in the amount of $319,200. At the time of these transactions the earned surplus of the corporation was $855,783.82. The…
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