Opinion

E. K. Wood Lumber Co. v. Commissioner

  • 25 B.T.A. 1013
  • 1932 BTA LEXIS 1438
Court
United States Board of Tax Appeals
Filed
Mar 28, 1932
Status
Published
Author
Trammell
On the bench
Steknhagen, Smith, Trammell, McMahon
Cited by
3 cases

The opinion

Trammell,

dissenting: I am unable to agree with the reasoning which sustains the loss on the Burrows Bay Mill site. While a corporation may legitimately distribute or sell any asset to its stockholders, I do not believe that it can take a loss on account of selling an asset to a stockholder in control of the corporation, unless it *1032 sells it at a fair market value. Otherwise, a corporation might sell an asset to its stockholders for $10,000 which cost it $100,000, although it had a market value even in excess of cost, and take a loss. The record in my opinion is not sufficient to show that the market value was considered in the sale to Woods. If this principle is not followed there is nothing to prevent a corporation whose stock is closely held from taking mere arbitrary losses at will. The real question is where the burden of proof lies. My view is that the burden is on the taxpayer to show that it is entitled to the deduction and that this burden did not shift to the respondent when evidence of the sale was introduced. The testimony in the record is not sufficient.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.

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