Petitioner Market Basket, Docket No. 79270, claims an overpayment for the taxable year 1953 in the amount of $2,999.39. The issues presented for our decision are the correctness of the respondent's action in determining (1) that upon the liquidation of Jerseymaid Milk Products Co., Inc., on January 12, 1952, and the distribution of all of its assets to petitioners, goodwill in the amount of $537,500 was included among the assets so distributed; (2) that the fair market value of automotive equipment acquired by petitioners from Jerseymaid Milk Products Co., Inc., by way of liquidation on January 12, 1952, was $326,000; and (3) that petitioner W. J. Thiessen is liable for an addition to tax under section 294 (d) (2) of the Internal Revenue Code of 1939 for substantial underestimation of estimated tax for 1952.2 Additional issues presented by the pleadings have been settled by concession of the parties. GENERAL FINDINGS OF FACT. Such of the facts as have been stipulated are found accordingly. All of the income tax returns for all petitioners for all years here involved were filed with the district director of internal revenue at Los Angeles, California. Petitioners were stockholders in Jerseymaid Milk Products Co., Inc., a corporation engaged in owning and operating a wholesale milkprocessing and -distribution business until its liquidation in 1952. Issue 1. Goodwill. FINDINGS OF FACT. Jerseymaid Milk Products Co., Inc. (sometimes hereinafter referred to as Jerseymaid or the corporation), was a corporation organized under the laws of the State of California on July 24, 1947. It was formed for the purpose of engaging in the business of owning and operating a wholesale milk-processing and -distribution business. Jerseymaid on August 1, 1947, acquired all of the assets, subject to certain liabilities, of a predecessor partnership, Jerseymaid Milk 2 The parties have agreed on stipulation that the addition to tax for substantial underestimation of estimated tax determined by respondent against petitioner W. J. Thiessen for 1952 under section 294 (d) (2) of the 1939 Code is in issue here "to the extent that it is affected by the adjustments in controversy in these proceedings." We thereby understand the parties to have stipulated that the correctness of the respondent's action in determining the liability of petitioner for this addition to tax depends entirely upon our disposition of Issues 1 and 2. Proper adjustment accordingly will be made for this item under Rule 50. Petitioner Market Basket, Docket No. 79270, claims an overpayment for the taxable year 1953 in the amount of $2,999.39. The issues presented for our decision are the correctness of the respondent's action in determining (1) that upon the liquidation of Jerseymaid Milk Products Co., Inc., on January 12, 1952, and the distribution of all of its assets to petitioners, goodwill in the amount of $537,500 was included among the assets so distributed; (2) that the fair market value of automotive equipment acquired by petitioners from Jerseymaid Milk Products Co., Inc., by way of liquidation on January 12, 1952, was $326,000; and (3) that petitioner W. J. Thiessen is liable for an addition to tax under section 294 (d) (2) of the Internal Revenue Code of 1939 for substantial underestimation of estimated tax for 1952.2 Additional issues presented by the pleadings have been settled by concession of the parties. GENERAL FINDINGS OF FACT. Such of the facts as have been stipulated are found accordingly. All of the income tax returns for all petitioners for all years here involved were filed with the district director of internal revenue at Los Angeles, California. Petitioners were stockholders in Jerseymaid Milk Products Co., Inc., a corporation engaged in owning and operating a wholesale milkprocessing and -distribution business until its liquidation in 1952. Issue 1. Goodwill. FINDINGS OF FACT. Jerseymaid Milk Products Co., Inc. (sometimes hereinafter referred to as Jerseymaid or the corporation), was a corporation organized under the laws of the State of California on July 24, 1947. It was formed for the purpose of engaging in the business of owning and operating a wholesale milk-processing and -distribution business. Jerseymaid on August 1, 1947, acquired all of the assets, subject to certain liabilities, of a predecessor partnership, Jerseymaid Milk 2 The parties have agreed on stipulation that the addition to tax for substantial underestimation of estimated tax determined by respondent against petitioner W. J. Thiessen for 1952 under section 294 (d) (2) of the 1939 Code is in issue here "to the extent that it is affected by the adjustments in controversy in these proceedings." We thereby understand the parties to have stipulated that the correctness of the respondent's action in determining the liability of petitioner for this addition to tax depends entirely upon our disposition of Issues 1 and 2. Proper adjustment accordingly will be made for this item under Rule 50. Products Co., which previously had been engaged in the same business. Jerseymaid began operations at the time of acquisition of these assets. The partners in the Jerseymaid Milk Products Co., the predecessor partnership, on August 1, 1947, were W. J. Thiessen, James Marzullo, T. A. Von der Ahe, Alexander's Markets, Inc., Carty Bros., Mayfair Companies, Roberts Public Markets, Inc., and Fitzsimmons Stores, Ltd. As consideration for the assets of the partnership, Jerseymaid issued 300,000 shares of common stock at a par value of $1 per share to the transferors on August 1, 1947. The original issuance of shares of Jerseymaid on August 1, 1947, the issuance of additional shares in 1948, the transfers of shares which occurred throughout the existence of the corporation, and the prices per share for each transaction were as follows: 'T. A. Von der Ahe at all times here material was either vice president or president of Von's Grocery Co., the owner and operator of a chain of supermarkets in the metropolitan Los Angeles area. The Jerseymaid stock held by him was held as trustee for several trusts (which also owned stock in Von's Grocery Co.) which are petitioners herein: Charles Kennard Von der Ahe Trust, Theodore Albert Von der Ahe Trust, Wilfred Luer Von der Ahe Trust, Mary Linda Von der Ahe Trust, Vincent Michael Von der Ahe Trust, Thomas Richard Von der Ahe Trust, Walter Bruno Von der Ahe Trust, Gretchen Ellen Von der Ahe Trust, Frederick Theodore Von der Ahe Trust, Christina Elizabeth Von der Ahe Trust, Henry Lieb Von der Ahe Trust, Marie Therese Von der Ahe Trust, and Virginia Marie Von der Ahe Trust, Docket Nos. 79273-79285, respectively. The shares owned by Alexander's Markets, Inc., the owner and operator of a chain of supermarkets in the Los Angeles area, were held in the name of S. H. Alexander, one of the principal officers therein. The shares owned by Carty Bros., a partnership owning and operating a chain of supermarkets, were held in the name of Henry Carty, one of the partners. The stock owned by Mayfair Companies, the owner and operator of a chain of supermarkets in the Los Angeles area, was held in the name of Edwin J. Fox. During 1948 Market Basket, a corporation which was the owner and operator of another chain of supermarkets, purchased the Jerseymaid stock owned by Mayfair Companies. Roberts Public Markets, Inc., a corporation, was the owner and operator of a chain of supermarkets in the Los Angeles area. In 1951, all of the stock of Roberts Public Markets was acquired by Fitzsimmons Stores, Ltd., which also was the owner and operator of a chain of supermarkets. Thereafter, Roberts Public Markets, Inc., was dissolved and its assets were distributed to Fitzsimmons Stores, Ltd., which later changed its name to Thriftimart, Inc. |