Francis C. Whelan, U. S. Atty., to have South Dist. out of California, by the Dedicated Elizabeth. Keir, Asst. U. S. Atty., Captain, Tax Section, La, Cal., to loans Noank CT own defendant.
Thereafter, towards the April 19, 1957, Hollywood combined towards Family. The organization lifetime away from Movie industry terminated however, the whole organization is actually proceeded versus disruption since part of plaintiff connection, Household.
Most of the proceeding conditions was indeed complied having from the Plaintiff. It Judge possess jurisdiction because of the advantage from twenty eight U.S.C. 1346(a) (1) and 1402(a) (1), and 26 You.S.C. 7422. The income taxation, if any, would be the fact out-of Hollywood, but Domestic might possibly be accountable once the transferee and has paid off such as for instance income tax since transferee.
Webster, ordered all a fantastic be certain that inventory out-of Hollywood Offers and Mortgage Organization (hereinafter referred to as “Hollywood”)
You to definitely top situation and many secondary products are demonstrated of the pleadings, however, a choice with the number one situation disposes of the case within its entirety.
Inside March away from 1957, Plaintiff Home Deals and you will Mortgage Connection, transferee (hereinafter described as “Home”) and their lawyer and you may broker, Thomas C
The key concern is: Into the good merger, really does brand new reserve getting money owed of your blended enterprise feel expidited toward earnings because of the merger? *135 Especially right here, if the pre-merger reserve to have money owed regarding Movie industry at the time of April 19, 1957, be added to its earnings in finally return?
The issues while the framed on pleadings as well as the history of the outcome are on the basis you to definitely Movie industry was a completely-possessed subsidiary off Home and, hence, brand new merger try pursuant so you’re able to twenty six U.S.C. 332. (The point records hereinafter are to the interior Cash Password out of 1954). But not, this method disregards ab muscles uncommon corporate structure away from a savings and you will financing organization underneath the laws and regulations of the County out-of California. When you find yourself all make certain stock out of Movie industry is actually owned by Domestic, the newest depositors away from Hollywood, just who, below Ca laws, have been called “investors,” got a directly to choose, a straight to choose people in the brand new Panel off Administrators (but not a majority of such as for example Board), in addition to choose out of several-thirds ( 2/3 rds) of these investors was a requirement for new merger. Part 332 makes it necessary that the new moms and dad enterprise function as holder away from stock “having at the least 80 per cent of total joint voting fuel of all the groups out-of inventory permitted choose.” While you are lower than California laws the fresh depositor-shareholder’s notice is denominated “shares” in the place of “inventory,” new dealing with factor is not necessarily the model of this new depositor-shareholder’s desire although quality of liberties, choice and privileges about such attract. Just like the an affirmative a couple-thirds choose of the depositor-investors was required to accept brand new merger, and since such as for example depositor-investors met with the right to choose a certain number of people of Panel regarding Directors, then unless Family including had 80% of this kind regarding show permitted vote, the fresh merger couldn’t qualify below Sec. 332 because the a good liquidation from a subsidiary. Domestic did not very own any kind of such express; ergo, Point 332 wasn’t applicable.
Following merger away from Hollywood and you will Family, new depositor-shareholders from Movie industry turned into brand new depositor-shareholders out-of Home. Thereafter, the brand new depositor-shareholders away from Movie industry encountered the exact same professional-rata continuing interest in House because they had before the merger to your an excellent consolidated base. This new merger ranging from Hollywood and Home was a legal merger reorganization just like the you to definitely name is employed inside the Sec. 368(a) (1) (A). Lower than any principle, you will find adequate continuity interesting.
In the an excellent reorganization, the latest set aside to possess bad debts of one’s combined agency is not expidited into money as a result of the merger.