viable corporations. One was merged into the other in order to squeeze out a 9-percent minority stockholder interest. Such merger was a corporate reorganization, and section 381(b) (3) forbids the carryback of a postreorganization net loss to a taxable year of the predecessor corporation unless the transaction is a reorganization "described in subparagraph (F) of section 368 (a) (1)." I can see no escape from the necessity of determining whether this reorganization fell within (F). The question whether the elimination of a 9-percent adverse minority interest may be ignored or regarded as de minimis in order to satisfy the requirement of (F) that there be a "mere change in identity, form, or place of organization" is a teasing and difficult one. And I can understand why one might wish to avoid it. But it cannot be sidestepped here and must be faced. In failing to address itself to the issue thus presented and argued by the parties, I think the majority erred. I express no opinion on the question itself at this time until it is considered by the Court. WITHNEY, ATKINS, SCOTT, and FEATHERSTON, JJ., agree with this dissenting opinion. SCOTT, J., dissenting: I respectfully disagree with the holding of the majority that the merger of Old Casco into New Casco was a reorganization in form only and should be ignored. The reorganization was in accordance with provisions of the laws of Connecticut whereby the holders of 91 percent of the stock of Old Casco were able to accomplish their objective of becoming 100-percent stockholders of a new corporation which owned the operating assets and conducted the business previously conducted by Old Casco. Corporate reorganizations provided for by State laws often effect little substantive change in the equitable ownership of a corporation or the nature of the corporate business. However, the Federal tax consequences of any reorganization are controlled by the specific provisions of the Internal Revenue Code. In my opinion the case should have been decided by a determination of whether the reorganization here involved was "a mere change in identity, form, or place of organization," so as to constitute a reorganization within the meaning of section 368 (a) (1) (F). RAUM, WITHEY, and ATKINS, JJ., agree with this dissenting opinion. FRED WONG GUNN, PETITIONER V. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT Docket No. 5283-64. Filed October 26, 1967. In 1945, the Pine Street apartment building and realty was acquired by petitioner and his wife, Ann, and Jack and Annie Chow. The Gunns and Chows each owned a one-half interest. Ann Gunn was granted a final divorce from petitioner in 1961. The divorce judgment decreed that all the property of the Gunns was community Stephen H. Kaufmann, for petitioner. Sheldon M. Sisson, for respondent. HARRON, Judge: The respondent determined a deficiency in income tax for 1961 in the amount of $7,405.57. The questions for decision are: (1) Whether a fee of $10,000 awarded by a court to the lawyer representing petitioner in a court proceeding under which an apartment property was sold was a capital expense, as respondent determined; or was deductible either as a business expense under section 162 (a), 1954 Code, or as a nonbusiness expense under section 212. (2) Whether an appraiser's fee of $500, for the appraisal of the same property, was a capital expense, or was either a business or a nonbusiness expense deductible under either section 162(a) or section 212. Respondent has conceded an additional deduction; effect will be given to his concession under Rule 50. FINDINGS OF FACT The stipulated facts are so found. The stipulations of facts, together with the related exhibits, are incorporated herein by reference. The petitioner filed an individual return for 1961 with the district director of internal revenue in San Francisco, Calif. The petitioner is sometimes referred to hereinafter as Fred. Prior to 1945, Fred was married to Ann (Anna) Wong Gunn. Ann obtained a divorce from Fred, as of December 23, 1959; the interlocutory decree was entered nunc pro tunc on January 15, 1960; the final decree of divorce was entered on March 2, 1961. The divorce proceeding was instituted by Ann in No. 492403, in the Superior Court in the City and County of San Francisco. The divorce action was contested and there was a trial. In that action, Fred's lawyer was Kenneth C. Zwerin. The issues here do not relate to Zwerin's legal services. In both the interlocutory decree and the final decree of divorce, the court, inter alia, decreed that all of the property of the parties "is community in nature"; and the court ordered and decreed specific awards of the several items of community property to each party, Ann and Fred. Included in their community property was their undivided 50-percent interest in real property located at 1001 Pine Street, San Francisco, which is an apartment house and the realty. It is referred to hereinafter as the Pine Street property. The court ordered and decreed that one-half of the undivided, 50-percent interest in the Pine Street property was awarded to Ann (25 percent), and one-half was awarded to Fred (25 percent). The Pine Street property had been acquired in 1945 by Fred and Ann Gunn (50 percent), and Jack and Annie Chow (50 percent). The undivided interests therein were recorded in the names of Ann Gunn and Annie Chow, the owners of record. The apartment building comprised between 35 and 40 apartments. It was operated as a business of renting apartments. The apartment rental business was conducted under the name of C & G Realty Co., a copartnership, with its office at the same address, 1001 Pine Street. The Crocker-Anglo National Bank was the beneficiary under a first deed of trust relating to the Pine Street property, which was collateral security for a promissory note evidencing indebtedness to the bank. According to a court order, dated July 14, 1961, in a proceeding designated No. 500313, in the Superior Court (which was not the divorce proceeding), the sole partners in C & G Realty were Annie Chow and Ann Gunn. The only business of C & G Realty (as far as the record here shows) was the renting of the apartments and the operation of the apartment property. On May 23, 1960 (after the entry of the interlocutory divorce decree on January 15, 1960), Ann Gunn filed another proceeding in the Superior Court, No. 500313, against the defendants Annie and Jack Chow, Fred Gunn, and the Crocker-Anglo National Bank, which related solely to the Pine Street property. In the complaint, the following mat ters were recited, inter alia: That Ann Gunn was the owner of record of an undivided one-half interest in the property; that Annie Chow was the owner of record of an undivided interest in the property; that it was alleged that Jack Chow and Fred Gunn, the respective spouses, claimed interests in the property; that the Crocker-Anglo National Bank was the beneficiary of a first deed of trust on the property; that "An apartment house constitutes the improvement on said real property and, therefore, partition in kind is [was] physically impossible”; and that the plaintiff, Ann Gunn, petitioned the Superior Court to— order a sale of the aforesaid real property, together with improvements, and that the proceeds therefrom be divided between [among] the parties hereto according to their respective rights, for a reasonable sum payable to her attorney as and for attorney's fees incident to the within action, for costs of suit and for such other and further relief as may be proper in the premises. This proceeding was entitled "Complaint to Partition Real Property." The above-described proceeding went to trial on July 14, 1961, about 1 year after the filing of the complaint on May 23, 1960. The parties appeared through their respective attorneys; the Crocker-Anglo National Bank gave its consent to the sale of the Pine Street property, subject to its lien; Ann Gunn was represented by her lawyer, R. G. Hearn; Annie and Jack Chow were represented by their lawyer, T. E. Feeney; and Fred Gunn was represented by his lawyer, Irvine Hodes. These lawyers filed the following stipulations: 1. Ownership of the property described in the pleadings on file herein is vested one-half in Annie Kwock Chow, one-fourth in Anna Wong Gunn and one-fourth in Fred Wong Gunn. 2. Annie Kwock Chow, designated as one of the defendants herein, and Anna Wong Gunn, designated as plaintiff herein, are the same persons appearing of record as the vestees of the real property described in the proceedings herein as doing business as C&G Realty Company, a copartnership. Said Annie Kwock Chow and Anna Wong Gunn appear herein in their individual and partnership capacities as aforesaid. 3. Annie Kwock Chow and Anna Wong Gunn are the sole partners of said C&G Realty Company, a copartnership. 4. A physical partition of the property described in the pleadings herein is impossible. 5. A sale of the aforesaid real property is necessary and all interested parties acquiesce therein. 6. The above-entitled court should forthwith appoint a sole referee to accomplish the sale as aforesaid pursuant to such terms and conditions as may be imposed by the above-entitled court. On the same day, July 14, 1961, the court entered an "Order Appointing Sole Referee and Directing Sale of Property." In this order, the court did the following: (1) The court decreed that the title to the Pine Street property was vested in Annie Chow, 50 percent; in Ann Gunn, 25 percent; and in Fred Gunn, 25 percent. (2) The court. 294-354-68- 4 ordered and decreed that the sole partners in C & G Realty were Annie Chow and Ann Gunn. (3) The court decreed that the physical partition of the Pine Street property was impossible, and that a sale of the property was necessary to protect the interests of the parties. (4) The court appointed Frank Gallagher the sole referee; and directed him to publish notice of intention to sell the real property as required by the Probate Code of California in regard to a private sale of real property in the matter of an estate; which notice should state that the sale would be for cash, that sealed bids with a 10-percent deposit should be deposited with the referee, that the referee reserved the right to reject any bid, that the court could reopen the bidding for higher competitive bids, and that the court reserved the right to reject any bid. (5) The court ordered that the property should be sold, and that the proceeds would be disbursed under a final court order. (6) The court ordered that the highest offer returned to the court by the referee, for confirmation or rejection, would be the highest net offer; and that real estate commissions, if payable, would be deducted from the gross offer in order to determine the highest net offer. (7) The court also ordered that, pursuant to the stipulation on file in the proceeding, upon the completion of the sale and the payment of all charges and claims, counsel fees would be determined by the court, and counsel fees would be paid "directly by the referee to the respective counsel appearing of record." On September 22, 1961, the report of Gallagher, the referee, was filed in the Superior Court, in which he made his "Return of Sale" to the court, and petitioned the court to consider and confirm the highest bid received for the sale of the Pine Street property, or to render further orders. The highest bid received was $402,600 cash, net, submitted by S. Louie; Gallagher reported that he believed this bid was commensurate with the value of the property and was the highest and best price that could be obtained. There was a court hearing on October 3, 1961, on the referee's report and petition, at which Gallagher testified regarding all matters relating to the contemplated sale and made his report about the highest bid of $402,600, net. At this hearing, Fred Gunn's lawyer, Irvine Hodes, objected to acceptance of the above selling price, on behalf of Fred. The parties in this case have stipulated with respect to the services of Hodes to Fred Gunn, as follows, and nothing more is shown in the record in this case about Hodes' services: That in the Superior Court, in the proceeding No. 500313, Hodes represented Fred Gunn; that in behalf of Fred, Hodes successfully resisted the sale of the Pine Street |