REORGANIZATIONS-Continued

7. Id. Tenure by mortgagee after acquisition was that of owner, not as
mere holder at one stage of transaction as finally completed. Id.

8. Id. Equitable control by unsecured creditors whose claims were lost
by the sale does not continue in resultant corporation. Id.

9. Id. In tracing continuity of control equity interest of parent which
acquired stock in successor is too remote. Id.

10. Id. Where reorganized corporation was insolvent its ownership was
virtually in its general creditors, and issuance of stock of reorganized
company to them, instead of to old stockholders, satisfies the continuity of
control requirement. Montgomery Building Realty Co.--

11. Insolvency Reorganizations. Gain or loss upon disposition in cur-
rent year of securities received in exchange in a prior year depends upon
recognition or nonrecognition of gain or loss in a final determination by
Commissioner of tax liability for such prior year. Bertha A. Henry-----
RES JUDICATA:

Previous Adjudication of Basic Fact. This Court found in an income tax
case that completed gifts were not made by these parties to their wives,
which decision was affirmed by the circuit court. Held, fact having been
judicially determined, although for a different cause, Commissioner is
barred from now asserting gift tax liabilities on the same transactions.
Ernest Strong --- .

RETIREMENT OF BONDS. See GAIN OR LOSS, I, 6, 7.

ROYALTIES. See CAPITAL GAINS AND LOSSES, 7; GAIN OR Loss, I, 2.
SOCIAL CLUBS. See ASSOCIATIONS, 3.

STATUTES AND REGULATIONS:

1. Act 1938, Sec. 808. The section is remedial in intent and is to be lib-
erally construed. Held, surviving corporation after two successive mergers
is entitled to exercise the election granted. Lehn & Fink Products Corp. -
2. Act 1942, Sec. 452 as Amended is effective on and after July 1, 1946,
and may not be retroactively applied. Mabel F. Grasselli_.

3. Internal Revenue Code; Sec. 22 (b) (9), as Amended. The 1942 Act,
sec. 114, specifically limits its application to periods beginning after Dec. 1,
1941, and the retention of a provision of the 1939 Act limiting its own appli-
cation may not be interpreted as extending the 1942 amendment to prior
years. Bush Terminal Buildings Co.---

4. Id. Secs. 22 (k) and 23 (u), enacted to cure previous inequity respect-
ing alimony payments have no effect on applicability of sec. 24 (a) (1),
which bars deductions for personal expenses. Frank J. Kalchthaler__

5. Id. Secs. 23 (s) and 122. It was not the intention of Congress to
exclude corporations in liquidation from the effect of these sections.
Acampo Winery & Distilleries, Inc..

6. Id. Sec. 112 (l) (2); Securities Acquired in Insolvency Reorganizations.
The term "recognized" is not employed in the sense it carries in other sec-
tions; that is, it is not used to connote "recognition" under the law.
Bertha A. Henry-.

7. Id. Recognition of gain or loss upon disposition in current tax period
is made to depend upon treatment; i. e., allowance or disallowance of pre-
vious claims, accorded by Commissioner in a final determination for year
of exchange. Id.

8. Id. Sec. 112 (b) (9) is limited to nonrecognition of losses sustained by
railroad companies which participate in reorganizations, pursuant to re-
ceivership or bankruptcy, with other railroad companies, and does not
deny losses sustained by individual bondholders. Bar B Co-

9. Id. Sec. 113 (b) (1) (B). The Supreme Court has held that obsoles-
cence of good will, due to prohibition legislation, is not within the intendment
of the statute. Rainier Brewing Co.

10. Id. Sec. 116 (a), Amended by Sec. 148 (a) of 1942 Act changes the
test for exclusion of income earned without United States from mere absence
to bona fide residence in a foreign country, effective for years subsequent
to 1942. Arthur J. H. Johnson_

Michael Downs__

J. Gerber Hoofnel -

Page

417

228

953

287

255

793

625

629

228

554

162

1040

1053

1136

STATUTES AND REGULATIONS-Continued

11. Id. Sec. 122 (d) (1) is a section which limits, not grants, the deple-
tion deduction allowable for net loss carry-over purposes. Virgilia Mining
Corp---

12. Id. The adjustment provided is made solely for computation of net
loss deduction carried forward from a prior year and does not affect right
to percentage depletion for tax year. Louisiana Delta Harwood Lumber
Co...

13. Id. Secs. 713 (e) (1) and 722 held, mutually exclusive.
Mill Co

Stimson

14. Commissioner's Regulations; No. 78. Articles 40, 35, and 34 must
be read together and articles 35 and 34 must be construed in the light of the
subject matter of article 40, bad debts, as distinguished from their own sub-
jects. Bush Terminal Buildings Co.-.

15. Id. No. 108, Sec. 86.3 applies to powers reserved not to those
granted to others. Mabel F. Grasselli__.

16. Id. No. 109, Sec. 30.736 (a)-3. To the extent that the regulation
denies certain deductions, otherwise allowable, to taxpayers, making an
election under sec. 736 (a) of the code to use accrual instead of installment
basis for excess profits tax income, it is invalid. Hecht Co...

Mackin Corp---

17. Id. Sec. 30.711 (b)-2, held invalid. City Auto Stamping Co__
18. Id. Sec. 30.721–3 providing that abnormal income due to increased
demand for product may not be allocated to other years, held to interpret
correctly the intent of Congress embodied in sec. 721 (a) (2) (C) of the code.
Soabar Co..

19. Id. No. 112, Sec. 35.722-2 (b) (1), denying taxpayers who compute
base period income under sec. 722 (a) of the code the right to apply the
rules provided in sec. 713 (e) (1), held valid. Stimson Mill Co---

20. Id. Amendment; T. D. 5488. To have the force and effect of law
the regulation must be a construction of long standing. Held, a recent
ruling represents the Commissioner's present construction of the statute,
and, although entitled to weight and consideration, its application, when
in conflict with previous construction of this and higher courts, is not
mandatory. Estate of Louis Stockstrom___.

TAXES:

Abnormalities. See EXCESS PROFITS TAX, II, 16.
Paid foreign governments. See CREDITS.
Overpayment; income tax. See OFFSETS.

Page

385

994

1065

793

255

643

648

354

89

1065

251

TRADE NAMES. See CAPITAL GAINS AND LOSSES, 7.

TRANSFEREES:

Liability. Where Court finds no tax due from transferor, there is no
liability assessable against its transferee. Cooper Foundation___.

389

Worth Steamship Corp---.

654

UNREALIZED PROFITS; INSTALLMENT SALES. See EXCESS
PROFITS TAX, II, 25.

WAR LOSSES. See ALIENS, 1, 2.

WORDS AND PHRASES:

"Abnormal." City Auto Stamping Co_-

Id. Rochester Button Co.---.

"Business league." Associated Industries of Cleveland.

"Claims against the estate." Estate of William P. Metcalf-

"Consequence." Laredo Bridge Co-

"Earnings and profits." Kimbrell's Home Furnishings, Inc.

354

529

1449

153

17

339

1350

263

1310

377

66

377

672

729

WORDS AND PHRASES-Continued

"Pensions." South Texas Commercial National Bank of Houston__

"Passing." Estate of Charles B. DuCharme

"Recognized." Bertha A. Henry -

"Residence." Arthur J. H. Johnson_.
Id. Michael Downs_.

Id. J. Gerber Hoofnel_.

"Total deficiency."
"Total income."

Maitland A. Wilson__

Leslie H. Green____

Page

705
764

228

1040

1053

1136

395

263