The opinion
Van Fossan,
dissenting: The prevailing opinion in this case turns solely on the ground that when the Cement Co. acquired 100 percent of the stock and bonds of the Railway Co. there was no reorganization under the statute. It may be pertinent first to point out that neither in the notice of deficiency, nor in the pleadings, nor at the hearing, has respondent ever questioned the fact that there was a statutory reorganization in 1922. The sole issue to which the attention of the parties has been addressed is whether or not the distribution of bonds in 1926 came under section 203 (c) of the Revenue Act of 1926, and the contention of respondent is that the distribution was made at such a time and in such a manner as to constitute the payment of a dividend and not a distribution “ in pursuance of a plan of reorganization.”
Section 203 (h) (1) provides:
(li) As used, in this section and sections 201 and 204—
(1) The term “reorganization” means (A) a merger or consolidation (including the acquisition by one corporation of at least a majority of the voting stock and at least a majority of the total number of shares of all other classes of stock of another corporation, or substantially all the properties of another corporation), or (B) a transfer by a corporation of all or a part of its assets to another corporation if immediately after the transfer the transferor or its stockholders or both are in control of the corporation to which the assets are transferred, or (C) a recapitalization, or (D) a mere change in identity, form, or place of organization, however effected.
*37 The Cement Co. acquired, all of the stock of the Railway Co. How then can it be held that this fact did not bring thé transaction within the express terms of the statute? The prevailing opinion cites the decision of the Supreme Court in Pinellas Ice Co. v. Commissioner, 287 U.S. 462 . With all respect it is submitted that this case, so far as pertinent at all, supports the exact opposite of the majority view. When the Pinellas case was before the Board it was held that the transaction was merely a sale of assets for money and did not partake of the nature of a statutory reorganization. The circuit court of appeals affirmed this decision (57 Fed. (2d) 188), but went beyond the necessity of the case and expressed certain dicta as to the interpretation of the statutory definition of a reorganization. When the case came before the Supreme Court on certiorari, that Court, after affirming the holding as to the character of the transaction, took occasion to point out that the dictum of the circuit court was too narrow and might prove perplexing. The Court proceeded to point out the error in the opinion of the Circuit Court and stated, in effect, that the parenthetical clause in section 203 (h) (1) (A) worked an enlargement of the terms “ merger ” or “ consolidation ” beyond their ordinary meaning. Returning to the situation in the case before them, the court expressed the thought on which the author of the prevailing opinion in this proceeding, as indicated by italics, places chief emphasis. But when the expression of the Supreme Court is read in its context it is readily seen that it has no pertinence here. The Court was addressing itself to a situation in which there had been a sale of assets for cash or its equivalent. The same factual situation obtained in Cortland Specialty Co. v. Commissioner , 60 Fed. (2d) 937, which the Supreme Court cited with approval. In the instant case we have the acquisition of all of the stock and bonds of one company by another company. It is not necessary to employ the liberty of interpretation authorized by the Supreme Court. The present case comes within the very language of the statute. Where a case falls squarely within the provisions of a statute it is not for this Board or the courts to write it out by assuming analogy to a different case.
It may be that some of the confusion in this case arises from the thought that the transaction here does not look like a “ reorganization ” as popularly understood. But we are concerned not with the popular definition or conception, but with the statutory definition, a very different thing. Whether this transaction was a “ merger ” or a “ consolidation ” at common law is not the question. The question is does it come within the statutory definition, especially the parenthetical clause which the Supreme Court has said enlarges the scope of the terms used. Believing that it does, I must dissent.
*38 By reason of the thesis on which the case is made to turn, no consideration is given to the proposition on which this case was submitted, i.e., the character of the distribution of the bonds. On this question I have no doubt of the correctness of petitioner’s position. Accordingly I am of the opinion that judgment should have been for the petitioner.