Bloomington Coca-Cola Bottling Co. v. Commissioner case brief

Bloomington Coca-Cola Bottling Co. v. Commissioner case brief
189 F.2d 14

SYNOPSIS:Appellant corporation sought review of a decision of a United States tax court, which upheld a determination of appellee commissioner of Internal Revenue that appellant sustained a loss upon the sale of real estate that did not come within the scope of § 112(b)(1) of the Internal Revenue Code, 26 U.S.C.S. § 112(b), for the purpose of computing appellant's excess profits tax credit based on an average base-period net income.

OVERVIEW: Appellant corporation wished to dispose of its old bottling plant and built a new one. A contractor completed the new plant at a cost of $ 72,500 and was paid $ 64,500 in cash and accepted the old buildings and the land upon which the old plant was located at a valuation of $ 8,000. In determining appellant's excess profit taxes based on an average period net income, appellee commissioner of Internal Revenue found that appellant sustained a loss upon the sale of the old building that did not come within the scope of 26 U.S.C.S. § 112(b).

PROCEDURAL HISTORY:
The tax court sustained appellee's determination, finding that the disposition of the old plant was a sale and not an exchange of property for like property that was protected from tax impact under § 112(b). Appellant sought review, arguing that the old building was an exchange and that the loss should be allowed under 26 U.S.C.S. § 711 (b)(1)(E) because the building was abandoned.

HOLDING:
The court affirmed the tax court's decision, holding that the old building was sold and not exchanged and that there was no evidence justifying abandonment or that the loss was due to obsolescence.

RULES:
A sale of property is transferring property in consideration of a definite price in terms of money, and an exchange of property is transferring it without an exchange of money.

OUTCOME: The court affirmed the tax court's decision that sustained appellee commissioner of Internal Revenue's determination that appellant corporation's loss sustained in the sale of the old plant did not come under the provision of the applicable statute. The court held that the old building was sold and not exchanged and that there was no evidence justifying abandonment or that the loss was due to obsolescence.

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