Continental Oil Co. v. Helvering (100 F.2d 101, 1938)

MILLER, Associate Justice.

This is a petition to review a decision of the Board of Tax Appeals determining transferee liability for deficiencies in income taxes for the period January 1 to March 15, 1920, in the amount of $37,-344.59.

During the period involved, the Mutual Oil Company of Maine, hereinafter referred to as Maine, owned the entire capital stock of the Mutual Oil Company of Arizona, Mutual Refining and Producing Company, and Northwestern Oil Refining Company, which, for convenience, will be referred to as Arizona, Mutual Refining, and Northwestern, respectively. On March 15, 1920, Maine transferred all of its assets to petitioner’s predecessor, also a Maine corporation, originally organized under the name of Elk Basin Consolidated Petroleum Company, in exchange for 600,000 shares of the capital stock of the latter. The name of Elk Basin Consolidated Petroleum Company was changed on December 22, 1921, to the Mutual Oil Company; subsequently, in the year 1925, the said Mutual Oil Company changed its name to the Continental Oil Company, which latter company is the petitioner herein; and for convenience both petitioner and its predecessors will be referred to hereinafter as petitioner.

In 1921, petitioner filed a consolidated income -and profits tax return for the calendar year 1920 on behalf of itself and its affiliates, and included therein the income of Maine, Arizona, Mutual Refining, Northwestern, and itself, for the entire year, and set up and asserted the consolidated invested capital of all the companies as of January 1, 1920. The return disclosed a net tax liability of $200,707.45, which was paid by petitioner.

On April 30, 1921, Mutual Refining and Northwestern, without consideration therefor, transferred their assets to Arizona and dissolved. The value of these assets was sufficient in each instance to satisfy the liability for income and excess profits taxes which respondent contends existed against the transferors. On December 31, 1921, Arizona, also without consideration for the transfer, conveyed all its assets to petitioner and dissolved. The value thereof was sufficient to meet all tax liabilities of Arizona as well as those of Mutual Refining and Northwestern, should such liabilities exist.

The Commissioner of Internal Revenue, respondent herein, audited the consolidated return filed by petitioner for itself and its affiliates and determined that two separate corporate affiliations existed ■within the time covered by the return — one with Maine as parent and Arizona, Mutual Refining and Northwestern as subsidiaries tor the period January 1, 1920 to March 15, 1920; the other with petitioner as par