June 21, 1935
TRAFFORD OIL & GAS CO.
COMMISSIONER OF INTERNAL REVENUE
Petition by the Trafford Oil & Gas Company to review an order of the Board of Tax Appeals sustaining the action of the Commissioner of Internal Revenue in determining deficiencies in petitioner's income taxes.
Before BUFFINGTON, WOOLLEY, and THOMPSON, Circuit Judges.
BUFFINGTON, Circuit Judge.
While the record in this income tax appeal is large and the facts involved, yet in the final analysis the case resolves itself into a narrow question. The controlling stockholders of the Trafford Oil & Gas Company, a Pennsylvania corporation, the appellant taxpayer, desired to sell certain of its assets. To effectuate such purpose, three of its directors, Wynn, Starr, and Carson, who were large stockholders, but who had no authorization from the corporation or its directors, made an option agreement with the Kingston Corporation for the sale of such assets.The latter exercised the option and thereafter the taxpayer company transferred its said assets to the Duquesne Gas Corporation, to which Kingston Corporation had assigned its option rights. The taxpayer really made the profit here involved. Subsequently, taxpayer went into liquidation and was dissolved.
The contentions of the government and taxpayer are summarized in the opinion of the tax board, as follows:
"The only issue that the parties to this proceeding desire the Board to determine is whether the sale of certain assets to the Duquesne Gas Corporation, nominee of the Kingston Corporation, for which deeds and assignments were delivered on April 10, 1930, was a sale made by or on behalf of the petitioner corporation resulting in the profit derived therefrom being taxable to it.
The petitioner contends that the sale of the assets to the Duquesne Gas Corporation was not a sale made by or on behalf of it and that the profit derived therefrom is not taxable to it. The respondent contends that the sale of the assets was made by or on behalf of the petitioner and that the profit therefrom is taxable to the petitioner."
The voluminous facts and proceedings here involved are detailed at length in the opinion of the tax board and by reference thereto we avoid needless repetition. Regarding the present case as substantially in line with Hellebush v. Commissioner (C.C.A.) 65 F.2d 902, the Board held:
"The sale here involved must be considered as one made by the petitioner to the Duquesne Gas Corporation, the nominee of the Kingston Corporation, and that the profit derived therefrom is taxable to the petitioner. The action of the respondent is therefore sustained."
Finding ourselves in accord therewith, the order of the tax board is affirmed and the appeal dismissed.
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