St. Louis Union Trust Co. v. Commissioner

*323 This is a proceeding for the redetermination of a deficiency in income tax for the calendar year 1921 of $47,796.84. The petitioner alleges error by the respondent in disallowing a deduction of $136,510, on account of a sale of stock. The petitioner now concedes that such amount was erroneous but alleges that a deduction of $70,260 was proper.

FINDINGS OF FACT.

The petitioner, St. Louis Union Trust Co., the duly appointed, qualified and acting executor of the will of Edward Mallinckrodt, Sr., who died since the petition was filed, duly substituted as petitioner in this proceeding, is a corporation organized under the laws of Missouri, with its principal office in St. Louis.

On January 7, 1921, Edward Mallinckrodt, Sr., sold 500 shares of stock of the St. Louis Union Trust Co. for $200.50 a share, or a total of $100,250.

*324 Prior to March, 1902, Edward Mallinckrodt, *2995 Sr., was the owner of 500 shares of stock of the Union Trust Co. of St. Louis which he had acquired at an average cost of $214.8713 per share. On or about March 1, 1902, the assets and business conducted by the Union Trust Co. were taken over by the St. Louis Union Trust Co. On or about that date Edward Mallinckrodt, Sr., exchanged his 500 shares of stock in Union Trust Co. for 500 shares of stock in St. Louis Union Trust Co. and $92.42 cash for each share, or a total of $46,220, of which $46,000 represented $92 per share on account of principal and $220 on account of interest. At the time of the exchange the market value of the shares of the Union Trust Co. was $446 per share, and that of the St. Louis Union Trust Co., after the acquisition of the assets of the Union Trust Co., was $372 per share.

The fair market value of the stock of the St. Louis Union Trust Co. on March 1, 1913, was $470 per share.

OPINION.

SIEFKIN: In this proceeding the only dispute is about the cost of the stock sold in 1921. In 1902 the petitioner received the 500 shares in question, then worth $372 a share, in exchange for 500 shares of another stock, then worth $446 a share, and was paid $92*2996 a share in addition.

In accordance with prior decisions of the Board we hold that the petitioner sustained a loss in 1921, using as a basis the market value of $446 per share for the 500 shares of stock of Union Trust Co. exchanged, reduced by $46,000 cash received.

Judgment will be entered under Rule 50.