Home Coupons and you can Loan Organization v. Us, 223 F. Supp. 134 (S.D. Cal. 1963)

Автор: | 05.11.2024

Home Coupons and you can Loan Organization v. Us, 223 F. Supp. 134 (S.D. Cal. 1963)

Francis C. Whelan, U. S. Atty., to possess Southern Dist. out of California, of the Dedicated Elizabeth. Keir, Asst. U. S. Atty., Head, Tax Part, Los angeles, Cal., to possess defendant.

After that, to your April 19, 1957, Hollywood merged for the Family. The corporate lifestyle out-of Movie industry terminated but the whole business is proceeded instead disturbance because a part of plaintiff relationship, Family.

Every proceeding standards was basically complied with by the Plaintiff. Which Judge provides jurisdiction because of the virtue of twenty eight U.S.C. 1346(a) (1) and you can 1402(a) (1), and you may twenty-six You.S.C. 7422. The income taxation, if any, is the fact from Hollywood, but Home might possibly be responsible once the transferee and has paid back particularly income tax because the transferee.

Webster, bought all the verify inventory from Hollywood Coupons and you will Mortgage Association (hereinafter named “Hollywood”)

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That first topic and some supplementary points is actually showed by pleadings, but a decision into the primary question dumps the fact in its entirety.

When you look at the March off 1957, Plaintiff Domestic Savings and you may Financing Relationship, transferee (hereinafter referred to as “Home”) employing attorney and you will representative, Thomas C

An important concern is: Within the a merger, does brand new set aside to own money owed of one’s matched firm feel accelerated to your earnings because of the merger? *135 Especially right here, if the pre-merger set-aside to possess bad debts out of Hollywood at the time of April 19, 1957, be included in its earnings in its finally come back?

The problems because the framed regarding the pleadings plus the reputation of the way it is are on the basis one Movie industry is actually an entirely-had part from Home and you may, hence, this new merger are pursuant to help you 26 U.S.C. 332. (All of the section recommendations hereinafter are to the interior Revenue Password out-of 1954). Yet not, this approach disregards the very uncommon business build out of a savings and you will loan connection underneath the regulations of one’s Condition off Ca. While you are all verify stock from Hollywood was belonging to Household, the brand new depositors away from Hollywood, exactly who, less than California rules, are called “investors,” had a straight to choose, a straight to decide members of brand new Board of Administrators (yet not a majority of eg Panel), in addition to choose out of a few-thirds ( 2/step 3 rds) of these shareholders is actually a need for the fresh new merger. Point 332 makes it necessary that new mother organization be the proprietor off stock “possessing at least 80 % of your complete mutual voting electricity of all the categories of stock eligible to vote.” When you’re not as much as Ca legislation the new depositor-shareholder’s attract is actually denominated “shares” instead of “inventory,” the brand new controlling foundation is not necessarily the make of new depositor-shareholder’s attention nevertheless the quality of legal rights, choice and you may rights linked to instance appeal. Because the an enthusiastic affirmative several-thirds choose of one’s depositor-investors had to agree new merger, and since such as depositor-shareholders had the right to choose a certain number of players of Panel regarding Administrators, following except if House also had 80% of this type of share entitled to choose, the newest merger cannot be considered significantly less than Sec. 332 while the an excellent liquidation regarding loans for the self employed a subsidiary. Home did not individual any kind of these types of display; therefore, Section 332 wasn’t appropriate.

Following merger of Movie industry and you will Domestic, brand new depositor-investors out-of Hollywood turned into new depositor-investors off Household. After that, this new depositor-investors out of Movie industry had the same specialist-rata continuing interest in Home because they got through to the merger for the a good consolidated basis. The newest merger ranging from Movie industry and Domestic is actually a legal merger reorganization because the one title is utilized within the Sec. 368(a) (1) (A). Less than any idea, there can be sufficient continuity of great interest.

When you look at the an effective reorganization, the brand new reserve to have bad debts of the combined agency is not accelerated to your earnings as a result of the merger.

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