1927 BTA LEXIS 3139 | B.T.A. | 1927
Lead Opinion
Section 202 (c) (1), Bevenue Act of 1921, provides:
(c) For the purposes of this title, on an exchange of property, real, personal or mixed, for any other such property * * * no gain or loss shall be recognized—
(1) When any such property held for investment * * * is exchanged for property of a like kind or use.
The respondent does not question that each lot of stock was held for investment, or that the William Whitman Co. stock was property of a like kind or use. His position is that there was a sale of the Corning Glass Works stock, and petitioner realized a profit thereon which is taxable. He argues that petitioner has not sustained the burden which is upon her of proving an exchange within the meaning of the statute. In support of his position he relies largely on the statement which was mailed by Estabrook & Co. to petitioner. This statement shows the transaction as though petitioner purchased the William Whitman Co. stock with proceeds from the sale of the Corning Glass Works stock.
However, the uncontroverted evidence of what was actually done shows the essential elements of an exchange. The difference between a sale and an exchange is that in the former property is transferred in consideration of an agreed price expressed in terms of money, while in an exchange property is transferred in return for other property without the intervention of money. 23 C. J., p. 185. Here petitioner owned shares of stock of one corporation; Estabrook & Co. owned shares of another. She transferred her stock to Esta-brook & Co. and the latter transferred to her in return stock which they owned of the other corporation, and each thereafter owned and held the stock thus acquired. There was no intermediary or any intermediate transfer. The fact that there was an adjustment of the accrued dividends in which money passed does not affect the nature of the transaction. Each party could have reserved his accrued dividend without affecting the transfer of ownership of the stock. The written statement upon which respondent relies apparently is on a form which was used generally by Estabrook & Co. It is entitled to weight but it is not conclusive and we think it is overcome by the convincing evidence of what was actually done by the parties.
Judgment will he entered for the petitioner on the issue raised, on 15 days' notice, u/nder Rule 50.
