Opposition Brief — Likins-Foster Honolulu Corp. v. Commissioner

_ - ° ~

e

INDEX

Page

Ss OE nko ees 1

” eee cee, OO A EEN nl oo AD liebe reg 1

Questions presented__....................____. 2

Statutes and regulations involved__.....________ 2

WINS. oan cues ee 3

ee gon CM ALY AA py Ss aniN y 7

cote y aag 5 Oe Seats AR ey EES ei 15

Pin rece ee ee 16

CITATIONS

Cases: .

Commissioner v. Henry Hess Co., 24) F. 2d

se ee Ee NS, EE OS

Commissioner v. South Texas Co., 333°.U.S.

eee Phe See Se ee 13

Covered Wagon, Inc. v. Commissioner, 369 F.

secthcherna Ae ys ee RS: 7,8, 911

Crane v. Commissioner, 331 U.S.1_._._____” 7

Duignan v. United States, 274 U.S. 195______ 10

Dwight v. United States, 328 F.2d 973_______ 8,9

Fernandez v. Wiener, 326 U.S. 340__________ 9

Helvering v. Winmill, 305 U.S. 79.....______ 13

Helvering.v. Wood, 309 U.S. 344___...._____ 10

Lawn v. United States, 355 U.S. 339...._____ 10

Local Finance Corp. v. Commissioner, 407 F.

2d 629, certiorari denied, No. 561, this

Term, December 8, 1969_.___.....______ 12

Lykes v. United States, 343 U.S. 118...._____ 13

Towanda Textiles, Inc. v. United States, 180 F.

Supp. 5 _ BS aarti yao ea Aiea bur 8

ravis v. Unifed States, 287 F. 2d 916, cer-

tiorari denietl, 368 U.S. 824______ pen, Ser N 8

United States v, Correll, 389 U.S. 299..._____ 13 +

United States v. Morton, 387 F. 2d 441_______ 9

(I)

378-475—70-—1, :

—~ Cauees Aarts metas oo x . eee. Cait Ramet o~ toate ert ee

2) s at. a sw

et te ual eed

. |

3 Bit

j Cases—Continued Page

Wendell v. Commissioner, 326 F. 2d 600_----- 8

Wood Harmon Corp. v. United States, 206 F.

Supp. 773, affirmed on another issue, 311 F.

aA 59 Re ee ae an 8

Zellerbach Co. v. Helvering, 293 U.S. 172__--- 10

Statutes:

Act of February 26, 1931, c. 307, 46 Stat. 1421

(40 U.S.C. 258a). EES aR ee aa P 7,17, 18,19

Housing Amendments of 1955, c. 783, 69 Stat

635, Sec. 404 (42 U.S.C. 1594a) mieee _.-10,19, 20

Internal Revenue Code of 1954 (26 U.S.C.):

Sy Nee ER SE Macatee el oe 14

WG Ms bcos etacannkecwetcucunswaeen 7, 8,9

Sec. Se bev blueat news dcaeebwete 14

OO Ge. cco wnueces ens cabuswneens 11, 12,13

ee SO eee 14,17

DO, BE onic adn nonce puuees acoeeous 14

Miscellaneous:

Bittker and Eustice, Federal Income Taxation

of Corporations and Ne? (2d: ed.

|) RSA eR SP rte Cr et PRN ei 14

Treasury Regulations 86, Art. O08 Gos cats 14

Treasury Regulations on Income Tax (26

C.F.R.):

SO Sse ccessccusvctGanns 12, 13, 14, 20

Oe eS ee 6

hb: Ae eka centile kh eacers ces 14, 20, 21

>

;

Yn the Supreme Gourt of the United States

OcroBerR TERM, 1969

No. 1037 -

Lixtns-Foster HonoLuLu Corp., ET AL., PETITIONERS

Vv.

COMMISSIONER OF INTERNAL REVENUE

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

OPINIONS BELOW

The opinions of the Tax Court (Pet. Apps. B and

C) are not officially reported. The opinion of the court

of appeals (Pet. App. A) is reported at 417 F. 2d 285.

JURISDICTION

The judgment of the court of appeals was entered on |

November 16, 1969 (Pet. 2). The petition for a writ of

certiorari was filed on January 5, 1970. The jurisdic-

tion of this Court is invoked under 28 U.S.C. 1254(1).

(1) -

e Ss

QUESTIONS PRESENTED -

1. Whether the courts below correctly held that

gains realized by certain of the petitioner corporations

(the “Wherry” corporations) from the condemnation

sales of their mortgaged properties to the United

States did not qualify for nonrecognition under Sec-

tion 337-of the Internal Revenue Code of 1954, be-

eause the sales occurred when title and possession

passed to the United States, which was prior to the

Wherry corporations’ adoption of plans of liquidation.

2. Whether the Commissioner abused his discre-

tion under Section 482 of the Internal Revenue Code

of 1954 in allocating gain realized on the sale of houses

from the corporations which purportedly sold the

houses and reported the gain, to a commonly con-

trolled corporation which had constructed the houses,

where all of the corporations were part of a consoli-

dated group and the construction corporation trans-

ferred the properties to the selling corporations solely

for the purpose of providing the latter with current ;

ineome to be oftset against operating loss carryovers

which could not otherwise be used.

e

STATUTES AND REGULATIONS INVOLVED

Pertinent statutory provisions are set forth in

Appendix D to the petition. Additional statutory pro-

visions and pertinent Treasury Regulations on In-

come Tax (1954 Code) are set forth in the Appendix,

infra, pp. 17-21.

Aichi Septet NRE Bird

3

STATEMENT

Petitioners gre a parent corporation, Likins-Foster

Honolulu Corporation (“Honolulu”), various of its

wholly or partially owned subsidiaries, and the share-

holders of these corporations.’ The corporations di-

rectly affected by the questions presented by this

petition are four Wherry corporation subsidiaries,”

and. another subsidiary, Likins-Foster Topeka Cor-

poration (“Topeka”). The tax years in issue are.

fiscal’ years ended June 30, 1957, 1958, and 1959. .:

During those fiscal years and until February 10, 1958,

these corporations were members of a consolidated

group for tax purposes. After that date, the four

Wherry corporations ceased to be members of the

consolidated group. (Pet. App. B 18.) :

I

The Wherry Act housing projects of the four

Wherry corporations were condemned by the United

States on October 30 and November 1, 1957, pursuant

-1 The, relationships between the parties were set.out in detail

by the Tax Court (Pet. App. B 25-28).

* They are: Likins-Foster Ord Corporation (“Ord’’) ; Likins-

Foster Monterey Corporation (“Monterey”); Likins-Foster

Biggs Corporation (“Biggs”) ; Likins-Foster El Paso Corpora-

tion (“El Paso”). Each Wherry corporation entered into a

contraet with the Secretary of the Army pursuant to the so-

called Wherry Act (Act of August 8, 1949, c. 403, 63 Stat. 570,

See. 1 (12 U.S.C. 1748 et seg.)), whereby it leased .land and

_ constructed housing for rent to military personnel (Ord and

‘Monterey in California; Biggs and El Paso in 'Fexas). (Pet.

App. B 46.)

* Topeka constructed and owned 421 houses and duplexes in

Topeka, Kansas, which it rented to personnel at Forbes Air

» Force Base (Pet. App. B 28-29).

‘4

to the provisions of the so- called Capehart Housing

- Act (Housing Amendments of 1955, ¢. 783, 69 Stat.

635, Sec. 404 (b) as amended by See. 512, Housing

Act of 1956, c. 1029, 70 Stat. 1091: (42 U.S.C. 1594a

‘(b)).* The condemnation proceedings were initiated

by the filing of declarations of taking and the deposit

of the estimated compensation for the properties in’

the appropriate district courts in Texas and California

pursuant to Section 1 of the Act of February 26,

1931, ¢. 307, 46 Stat. 1421 (40° ‘U.S.C. 258a). The dec-

larations of taking recited iat the properties being

taken consisted of all right, title and interest of the

Wherry corporations “subject to the interest of” the

-mortgagees. The Wherry corporations contested the

proceedings only with vegard to the issue of just

compensation. (Pet. App. B 46-47.)

The United States then entered into agreements

with the mortgagees assuming the liabilities of the

Wherry corporations on their mortgages (Pet: App.

B 48-49). On August 27, 1958, and September 2, 1958,

the Wherry corporations requested and received the

funds which had been deposited by the United States

in the district courts as estimated compensation for

the, taking (Pet. App. B 49). On August 11,. 1958, |

each of the Wherry corporations had adopted a plan of |

liquidation (Pet. App. B 49). They completed the

liquidations: on August 8, 1959 (Pet. App. B 9T).

‘The Capehart Housing Act, as amended, provided for

housing to be built by the federal government and the pur-

chase of Wherry housing at military installations where

Capehart housing was to be built.

5

The Tax Court upheld the Commissioner’s deter-

mination that, in fiscal 1958 when the properties were

taken, each Wherry corporation realized gain from

the condemnation sale in the amount of the excess of

the . principal amount of the mortgage liability

assumed over the cost basis (Pet. App. B 94-95).

The Tax Court further held that the condem-

nation sales occurred when the declarations of tak-

ing were filed and title vested in the United States.

Since the declarations were filed prior to the adoption

of the plans of liquidation, the Tax Court concluded

that the nonrecognition-of-gain provisions of Section

337 of the Internal Revenue Code of 1954 did not

apply (Pet. App. B 98-99). The court of appeals held

that the condemnation sales occurred and the gains

thereon were realized when the United States assumed

the mortgages by agreement with the mortgagees,

which also preceded adoption of the liquidation plans,

and accordingly affirmed the Tax Court’s holding that

Section 337 was inapplicable (Pet App. A 6-%,:

14-17).

rt

During the fiscal year ended June 30, 1957, Topeka

conveyed some of the houses it had constructed to the ©

four Wherry corporations and they, in turn, imme-

diately resold the properties to the public. Topeka’s

books. showed that the price paid by the Wherry cor-

porations exceeded Topeka’s basis by $882,968 (Pet.

App. B 29). The books of the Wherry corporations

disclosed: that they resold the properties for $387,654

in excess of the amount paid by them to Topeka (Pet.

al

6

App. B 31). Since Topeka and the Wherry corpora-

tions were part of a consolidated group, Topeka re-

ported no gain from its transactions with the Wherry

corporations (Pet. App. B 30). The Wherry corpora-

tions reported their sales on an installment basis and

reported a gain of $472,841 for the fiscal year ended

June 30, 1957 (Pet. App. B 31).

The Wherry corporations had preconsolidation net

operating loss carryovers which could only beyset off

against their income and -not against the income

of other members of the consolidated group. Treasury

Regulations 1.1502-31A (b) (3) (i). Topeka had no net

_ operating loss carryover. The transactions were ar-

ranged so that the preconsolidation net operating loss

of each Wherry corporation could be set off in full

against the gain from the sales of the houses (Pet.

App. B 31-32).

Exercising the allocation powers delegated to him

by Section 482 of the Internal Revenue Code of

1954, the Commissioner determined that the gains

reported by the Subsidiary Wherry corporations from

sales of the houses to the public were taxable to the

commonly controlled subsidiary Topeka, which had

constructed the houses for sale, but which, for the

purpose of reducing tax liability transferred them to

the Wherry corporations for purposes of sale. The Tax

Court sustained the Commissioner’s determination

(Pet. App. B 60-66), and the court of appeals affirmed

(Pet. App. A 9-12).

Rs

Rea eS Re ee

7

ARGUMENT | ‘

The court below correctly affirmed the Tax Court?s

determination of the issues raised by petitioners’ ap-

peals. There is no contlict, nor any other reason for

‘further review by this Court.

1. Section 337 of the Internal Revenue Code of 1954

lays down several conditions precedent to nonrecog- -

“nition of gain realized upon a-liquidation sale of cor-

porate assets, including the requirement that the sale.

oceur within 12 months after adoption of a plan of -

- complete liquidation. In holding that the gains real-

ized by the Wherry corporations from the econdemna-

tion sales of their properties were not entitled to the

nonrecognition-of-gain benefits of Section 337, because

the sales took place prior to adoption of the plans of

liquidation, the courts below reached the only decision

conipatible with the language of that section and the

relevant decisions.’ |

The condemnation proceedings in the instant case

were conducted pursuant to Section 1 of the Act of

February 26, 1931, e. 307, 46 Stat. 1421 (40 U.S.C.

208), Appendix, infra, pp. 17-19. That section provides

* There is no dispute as to the amount of gain in question, or

"as to whether the condemnation proceedings resulted in a “sale”

within the meaning of Section 337. It is settled that where

mortgaged property is sold and the purchaser assumes (or

takes subject to) the mortgage, the amount of gain “realized”.

by the seller includes the excess of the mortgage principal over

the seller’s basis in the mortgaged préperty. Crane v. Commis-

sioner, 331°U.S. 1. It is also settled that involuntary conversions

such as condemnations are “sales or exchanges” within the pur-

view 6f Section 337. See, e.g., Covered Wagon, Inc. v. Commis-

sioner, 369 F. 2d 629 (C.A. 8), and cases there cited.

878-475—70_—_2

5 - 2g

that title vests in the United States at the time of

filing the declaration of taking and the deposit of

estimated compensation in the distriet court, and that

the right to compensation vests immediately, with a

~ right to 6 percent interest on the amount by which

the final award exceeds the deposit. In this case, the

United States obtained not only title but immediate |

possession of the properties involved. (Pet. App. B

94-95.) Since title and possession had been con-

veyed and the right to compensation had vested in

October and November, 1957—and the liquidation plans

were not adopted until August, 1958—petitioners were

not entitled to the, benefit of Section 337. The courts have

uniformly held that, for purposes of Section 337, the

“sale” in a condemnation proceeding is deemed to have

taken place not later than the vesting of title in the tak-

ing authority and the simultaneous vesting of the right

to compensation. See, e.g., Covered Wagon; Inc. v. Com-

missioner, 369 F. 2d 629 (C.A. 8), which also involved

a condemnation pursuant to Section 1 of the Act of

February 26, 1931, supra; Dwight v. United States,

328 F. 2d 973 (C.A. 2); Wendell v. Commissioner,

326 F. 2d 600 (C.A. 2); Wood Harmon Corp. v.

United States, 206 F. Supp. 773 (8.D. N.Y.), affirmed.

ou another issue, 311 F. 2d 918 (C.A. 2); Towanda

Textiles,Inc. v. United States, 180 F. Supp. 373 (Ct.

Cl.) ; Travis v. United States, 287 F. 2d 916 (Ct. CL),

certiorari denied, 368 U.S. 824.°

° It is true, as petitioners point out (Pet. 9), that the time of

vesting of title under state condemnation laws varies from state

_ to state, and that Section 337, which turns on when a sale occurs,

might be available in connection with some state condemnations.

9 ae

Petitioners’ reliance (Pet. 8) upon United States v.

Morton, 387 F. 2d 441 (C.A. 8), and similar cases in-

volving destruction of insured property, is misplaced.

' Morton was decided by the Eighth Circuit, the same

court which decided Covered Wagon, supra; as the

court below pointed out (Pet, App. A 7), Morton did

not involve a condemnation sale, and the Eighth Cir-

cuit there expressly adhered to its decision in Cov-

ered Wagon, which did involve a condemnation

sale, as does the instant case. Moreover, as the court

below also observed (id., p. 7), the Morton decision

- turned on the fact that the amount received from the

“insurance company as reimbursement for the fire loss

there involved, was unascertainable. prior to adoption

of the-plan of liquidation,.“whereas the amount*ef the

deposits sought to be taxed in this case as capital gain

was determined either on the date of condemnation or

prior to the adoption of the plans of liquidation. ar

‘

But the condemnation sales here involved souk place pursuant to

a federal statute: See Covered Wagon, Inc. v. Commissioner, supra.

Moreover, where property rights are involved, it is not unusual

for the incidents of federal taxation to turn on local law.

Fernandez v. Wiener, 326 U.S. 340, 359-360.

* Even if petitioners had no opportunity to adopt a liquidation

plan prior to fhe condemnation sale, they would not have been

entitled to the benefit of Section 337. As the Second Circuit

noted -in Dwight v. United States, supra, where the taxpayer

had no advance notice of the.condemnation (p. 974) : “Hence the

- corporation had no opportunity to adopt a plan of, liquidation be-

fore condemnation, and the conditions of section 337 could not be

met. This may appear a harsh result, but if it is to be corrected

- Congress must act; the courts have no. power to do: so.” A

fortiori, petitioners are not entitled to the benefit of Section 337

wae, as here, the government had a duty to negotiate with

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—

- 2. Petitioners’ contention (Pet. 11-15) that the rec-

_ognizable gains from the, condemnation sales id not

“accrue” (and hence were not “realized”) in the year

of sale, but in a later taxable year not before the

Court, was not advanced in the court below.* Having

failed to raise the issue in the court below, petitioners

may not do so in the petition for certiorari. Zeller-

bach Co. v. Helvering, 293 U.S. 172, 182; Lawn v.

United States, 355 U.S. 339, 362, n. 16; Duignan v.

United States, 274 U.S. 195, 200; Helvering v. Wood,

309 U.S. 344, 349. Indeed, petitioners acknowledge

(Pet. 15), as they must, that the lone case with which

they allege direct conflict in this connection (Commis-

stoner Vv. Henry Hess Co., 210 F. 2d 553 (C.A. 9))

“was not called to the attention of the court below,” —

and accordingly was not.considered or even mentioned

by that court. In any event, Hess presented a situa-

tion quite different from that hére presented. The

question in Hess was whether an accrual basis corpor-

ation was taxable on gain from the reqjiisition of its

property, notwithstanding that the gain accrued in

a: year after the corporation had heen dissolved and

ceased to exist. No such question is here presented,

since the Wherry corporations were still in existence _

them prior. to instituting the condemnation proceedings. See

Housing Amendments of 1955, °c. 783, 69 Stat. 635, Sec. 404, as

amended (42 U.S.C. 1594a(¢)), Appendix, 7ifra, pp. 19-20.

8 Petitioners contended below that the gains were not realized

in the year title and possession passed to the United States

and the mortgages were assumed, on grounds other than that ‘

now urged in the petition. These grounds were properly re-

jected (Pet. App. A 3-6; Pet. App. B 96-99) and are no longer

urged here.

11 ; aces

when the gains from the condemnation sales accrued.

Nothing in the Hess opinion warrants petitioners’ :

assumption (Pet. 13) that gain from a condemnation

sale cannot accrue prior to final payment of the con- |

demnation award. a .

As for the other cases with which petitioners assert -

- conflict “in principle” (Pet. 11), they were, cited by

the court below (Pet. App. A 8-9) in rejecting pe-

titioners’ argument on an entirely distinct issue—not

raised in their petition—namelyy whether. Honolulu,

parent of the Wherry corporations and transferee of

their assets upon their liquidatién, was entitled to

deduct contested {ax liabilities in the year of the liqui-

dation. The courts below correctly held that these tax

liabilities did. not “accrue’’ until the contest was

terminated, and petitioners do not. challenge that

. holding here. Insofar as accrual of gain from a con.

demnation sale is concerned, Covered Wagon, supra,

is directly in point. It was there held that the gain f

accrues in the year when the government takes title

and makes a deposit, even though final payment of

the compensation i is made in a later year.

3. Section 482 of the Internal Revenne Code of

1954 vests in the Commissioner broad authority to al-

locate gross income and deductions among commonly

controlled organizations if such allocation “is necessary

in order to prevent evasion of taxes or clearly to re-

flect the income of any such organization * * *,’’ It

is settled that Section 482.empowers the Commissioner

to scrutinize closely transactions between commonly

controlled corpor ations in 01 ‘der to determine whether c

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such transactions would have been entered into in

— arm’s length negotiations between strangers, and to

allocate income or deductions between the controlled —

corporations if they fail to meet that standard, and

that the Commissioner’s exercise of the discretion

delegated to him by Congress in that section should

not be disturbed ‘unless plainly arbitrary or unrea-

sonable. See, e.g., Local Finance Corp. v. Gommis-

“sioner, 407 F. 2d 629 (C.A. 7), No. 561, this Term, cer-

tiorari denied, December 8, 1969, and cases there cited;

Treasury Regulations 1.482-1(b) (1).

The courts below correctly sustained the Commis-

sioner’s determinatign, pursuant to Section 482, that.

the gains reported in the consolidated returns by

the Wherry corporations from sales of houses to the

public were taxable to another subsidiary of Hono-

lulu (Topeka) which had constructed the houses for

‘sale, but which for purposes of tax reduction (carryover

of separate net operating losses not otherwise usable

on the consolidated return), first purportedly “sold”

the houses to the Wherry corporations for immediate

resale to the public. This was done in a year when all of

the corporations participated in a consolidated return.

The evidence shows, as both courts below found (Pet.

App. A 9-11; Pet. App. B 60-66), that the purpose of

the intercompany transfers was to provide the trans-

ferees with income against which they could offset oper-

ating loss carryovers not otherwise available to the

consolidated group because they were sustained in pre-

consolidation years in which the transferee-loss cor-

\

ia

porations had filed separate returns. On the basis of

that evidence, the Commissioner was fully justified in

allocating the gain from the Wherry corporations :

to Topeka. . :

There is no merit in otitis’ contention (Pet.

17-18) that Section 482 does not apply to. taxpayers

who participate in filing a consolidated return. The

longstanding Treasury Regulations under Section 482

(Section . 1.482-1(b) (2), ‘Appendix, infra, p. 20).

specifically provide that Section 482 and the regula-

tions under it “apply to the case of any controlled tax-

tn

payer, whether such taxpayer makes a separate or a

consolidated return.’’ This Court has “many times

declared that Treasury regulations must be sustained

unless unreasonable and plainly inconsistent with the

revenue statutes and that they constitute contempo-

raneous constructions by those char eed with adminis-

tration of these statutes which should not be over-

ruled except for weighty rgasons.’’ Commissioner Vv.

South Texas Co., 333 U.S. 496, 501. Furthermore, the

regulation in issue comes within “the settled principle_

that ‘Treasury regulations and interpretations long

continued without substantial change, applying to un-

amended or substantially reenacted statutes, are

deemed to have received congressional approval and

have the effect of law’’’. United States v. Correll, 389

U.S. 299, 305-306, quoting from Helvering v. W inmill,

305 U.S. 79, 83. See also Ly ykes v. United States, 343

(s

&

EDP PT MT ee

14

US. 118, 129° If any doubt otherwise existed ae

ing the applicability of Section 482 to taxpayers filing

consolidated returns, it is dispelled by Code Section

1505 ,which, in enumerating cross-references rele-

vant to the consolidated return seetions, specifically

refers to Se¢tion 482. See also Treasury Regulation

1.1502-80; Bittker and Eustice, Federal Income Taxa-

tion of Oorporations find Shareholders (2d ed. 1966),

p. 695.

Petitioners’ alternative contentions (Pet. 18-20)

that Code Sections’ 269 and 1551” are inapplicable

are addressed to straw issues. ‘The Commissioner’s

determination that the gains attributed to the Wherry

corporations in the consolidated return were earned

by and taxable to “Lopeka was made pursuant to the .

allocation powers vested in him by Section 482, not

by virtue of the provisions of Section 269 or Section

1551. BS ert :

‘ Ff ‘

° Treasury Regulation 1.482-1(b) (2) originally appeared as

Treasury Regulations 86, Art. 45-1(b) under the Revenue Act.

of 1934 whieh provided, as do the present Regulations, that

“Section 45 [of the Revenue Act ‘of 1934—+the original prede-

cessor of Section 482] and this article apply tothe case of any

controlled taxpayer, whether such taxpayer makes a separate

or a consolidated return.”

20 Tn the court below petitioners did het rely on Section 1551,

but on Section 382 (b) (3).

‘

a ‘

“15

CONCLUSION

The petition for a writ of sips ei should: be

denied. *

gamiaan sulimaitted. artes

Marcx 1970.

south N. GRISWOLD, .

' Solicitor General

JOHNNiE M. WALTERS, .

_ Assistant Attorney General.

Hakry Baum,

| WiiaM L. GOLDMAN, 3

“Attorneys.

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[26 U.S.C. 1505.] 3 =

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APPENDIX

Internal Revenue Code of 1954:

See. 1505. Cross References. a

(1) For suspension of running of statute of EY

‘limitations when notice in respect of a defz - = =,

ciency is mailed to one corporation, see section , .

6503 (a) (1). . :

(2) For allocation and deductions of related

trades or businesses, see section 482.

NAPS IVY F haa

Act of deeticaaid 26, 1931, c. 307, 46 Stat. 1421,

Section 1:

Be it enacted by the Senate and House of

‘Representatives. of the United States of

America in Congress assembled, That in any

proceeding in any court of the United States

outside of the District of Columbia which has

been or may be instituted by and in the name of

-and under the authority of the United States

. for the acquisition of any land or easement or

. right of way in land for the public use, the peti-

tioner may file in the cause, with the petition

or at any time before judgment, a declaration

of taking signed by the authority émpowered

by law to acquire the lands described in the

petition, declaring that said lands are thereby

taken for the use of the United States. Said ~~~’ ¥

declaration of taking shall contain or have

annexed thereto—

(1) A statement of the authority under which

and the public use for which said lands are ©

taken.

Ms (2) A descriptien of the lands — sufficient

. for the identification thereof.

(17)

. .

SOOPER Ee en Ieee eR ae

ORE LOT SUI IANO

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18

(3) A statement of the estate or interest in

said lands taken for said public use.

(4) A plan showing the lands taken.

(5) A statement of the sum of money esti-

mated by said acquiring authority to be just

compensation for the land taken.

Upon the filing said declaration of taking

and of the deposit in the court, to the use of the

‘persons entitled thereto, of the amount of the ,

estimated compensation stated in said declara-,

tion, title to the said lands in fee simple absolute,

or such less estate or interest therein as is speci- ,

fied in said declaration, shall vest in the United

States of America, and said lands. shall be

deemed to be condemned and taken for the use

of fhe United States, and the right to just com-

pénsation for the same shall vest in the persons

titled thereto; and said compensation shall

be ascertained and awarded in said proceeding

. and established by judgment: therein, and the

said judgment shall inclide, as part of the just

compensation: awarded, interest at the rate of

6 per centum per-annum on the amount finally

awardéd as the value of the property as of the

date of taking, from said date to the date of

payment; but interest shall not be allowed on

so much thereof as shall have been paid into

the court. No sum so paid into the court shall

be charged with.¢ommissions or poundage.

Upon the application of the parties in in-

terest, the court may order that.the money de-

posited in the court, or any part thereof, be

paid forthwith for or on account of the just

Sg: aprentcn to be awarded in said proceeding.

If the compensation finally awarded in respeet—

of said lands, or any parcel thereof, shall ex-

ceed the amount 6f the money so received by

any person entitled, the court.shall enter judg-

ment against the United States for the amount

of the deficiency... «+ . ‘

& Upon the*filing of,a declaration of taking,

“the court shall have power to fix the time within.

—

[40 U.S.C. 258a.]

19

which and the ternis upon which the parties.

in possession shall be required to surrender

péssession to the petitioner. The court shall have

power to make such orders in respect of en-

cumbrances, liens, rents, taxes, assessments, in-

surance, and other charges, if any, as shall be

- Just and'equitable. ° :

* * * wo” .

a

Capehart Housing Amendments of 1955, c. 783, 69

Stat. 635 : i f

Sec. 404 [as amended ty See. 512, Housing

Act of 1956, ¢. 1029,70 Stat. 1091, 1111]. * *

* * ¥ Ow. *

(c) Condémnation proceedings instituted

pursuant to this section shall be conducted in

“accordance with the provisions of the Act of

August 1, 1888 (25 Stat. 357; 40 U.S.C., see.

257) as amended, or any other applicable Fed-

eral statute. Before any such condemnation pro-

ceedings are instituted, an effort shall be made

to acquire the property involved by negotiation.

In any condemnation proceedings instituted

pursuant to this section, the court shall not

order the party in possession to surrender pos-

session in advance of final judgment unless a

‘ declaration of taking has been filed, and a de-

posit of the amount estimated to be just com-

pensation has been made, under the first section

of the Act of February 26, 1931 (46 Stat.

1421), providing for such declarations. Unless

title is in dispute, the court, upon application,

shall promptly pay to the owner at least 75 per

centum of the amount so deposited, but such

-payment shall be made--without~ prejudice to

any party to the proceeding. In the event that-

condemnation proceedings are instituted in ac-

cordance with procedures under such Act of

February 26, 1931, the court shall order that

the amount deposited shall be paid in a lump

CORR

PEO PROT EE PORE ee ee

Sl ath ae ati eee a

20

sum or over a period not exceeding five years

-in accordance with stipulations executed by the

parties in the proceedings. In connection with

eondemnation proceedings which do not utilize -

the procedures under suck Act, the Secretary

or his designee, after final judgment of the

court, may pay or agree to pay in a lump sum

- or, in accordance with stipulations executed by

the parties to the proceedings, over a period

not exceeding five years the difference between

the outstanding principal obligation, plus ac-

crued interest, and the price for the property

fixed by the court. Unless such payment is made

in a lump sum, the unpaid balance thereof

shall bear interest at the rate of 4 per centum

per annum.

* * * * . *

[42 U.S.C. 1594a.]

Treasury Regulations on Income Tax (1954 Code):

| § 1.482-1 Allocation of income and deductions

among taxpayers.

* * * * .

(b) Scope and purpose. (1) * * *

(2) Section 482 and this section apply to the

ease of any controlled taxpayer, whether such

taxpayer makes a separate or a consolidated

return. If a controlled taxpayer makes a sep-

arate return, the determination is of its true

separate taxable income. If a controlled tax-

payer is a party to a consolidated return, the

true consolidated taxable income of the affili-

ated group and the true separate taxable income

of the controlled taxpayer are determined con-

sistently with the principles of a consolidated

return.

* * cod a *

Pat ee ot -

21

[26 C.F-.R. .1.482-1.] ?

s * - * es *

§ 1.1502-80 Applicability of other provisions of

law.

The Code, or other law, shall be applicable

to the group to the extent the regulations do not

exclude its application. Thus, for example, in

a transaction to which section 381(a) applies,

the acquiring corporation will succeed to the

tax attributes described in section 381(c). Fur-

thermore, sections 269, 304, and 482 apply for

any consolidated return year.

[26 C.F.R. 1.1502-80.]

U.S. GOVERNMENT PRINTING OFFICE: 1870