# Claridge Apartments Co. v. Commissioner

> United States Tax Court · December 4, 1942 · 1 T.C. 163

URL: https://www.frixlaw.com/law-library/cases/4471077

## Case

- **Full name:** Claridge Apartments Company, an Illinois Corporation v. Commissioner of Internal Revenue
- **Court:** United States Tax Court
- **Decided:** December 4, 1942
- **Citations:** 1 T.C. 163; 1942 U.S. Tax Ct. LEXIS 26
- **Precedential status:** Published
- **Opinion:** Concurrence by Smith
- **Judges:** Opper
- **Cited by:** 11 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4471077

## Opinion text

Smith, /., concurring: I agree that the basis for depreciation of petitioner’s assets for 1938 is the fair market value of the assets at the date of reorganization. It is stated, however, in the Court’s opinion that:
* * * The substitution of common stock for bonds is not a cancellation or reduction of the liability represented by the bonds, no matter how much less the stock may be worth, since “the assets are not thereby freed from obligation. * * * While the bond loan has been terminated, the amount borrowed is now committed to capital stock liability instead of to the liability of a fixed indebtedness.” Capento Securities Corporation, 47 B. T. A. 691
I think that this observation is contrary to well recognized principles of law. Where a corporation substitutes shares of stock' in exchange for bonds the corporation is freed from indebtedness. A corporation does not owe any debt in respect of its capital stock.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4471077. Public record. Not legal advice.