The opinion
Pierce, J., dissenting: The situation herein presented is not one wherein the corporation acquired title to the machinery and equipment subject to a purchase money mortgage. Cf. Crane v. Commissioner, 333 U. S. 1 . To the contrary, the agreement which the corporation executed merely gave it possession and use of the property, on the following terms:
It is expressly and specifically agreed that title to said property, or any part thereof, or any additions thereto or improvements thereon, shall not pass from the Sellers to the Purchaser until the entire purchase price shall have been paid in full, and that no right, title or interest, legal or equitable, in the property aforesaid, or any part thereof, shall vest in the Purchaser until the delivery of the deed and bill of sale by the Sellers, or until the payment of its purchase price in full, and at the times and in the manner herein provided.
Thus the agreement was merely a contract to purchase; and the corporation obtained no depreciable interest in the property.
In the alternative, if the agreement was sufficient to convey any interest in the property, the transaction was an exchange under section 112 (b) (5) of the 1939 Code, with a consequent carryover of the transferor’s basis. The $10,000 of capital paid into the corporation was obviously an inadequate capitalization to permit “purchase” of the property. The corporation should be considered a “thin” corporation ; and the transfer of the property to it should be considered a contribution of additional equity capital.
Atkins, J., agrees with this dissent.