Tax Law Commons^™

Taxation - Income Tax - Exempt Reorganizations - When Is A Reorganization Bona Fide Under The Rule Of Gregory V. Helvering, Ralph E. Helper

Michigan Law Review

An individual wished to buy certain patents from a corporation, and at his instigation, the corporation transferred them to a newly-organized patent holding company, which issued its shares directly to the stockholders of the transferor corporation. On discovery of disadvantages from this scheme, the buyer requested that the new corporation be dissolved and that the patents be assigned by the original patentee individually. Petitioner and all other shareholders sold their stock in the new corporation to the patentee in exchange for his notes, and he dissolved the corporation, receiving the patents on liquidation. The patents were then sold for cash, …