Helvering v. Salvage, 297 U.S. 106 (1936)

Helvering v. Salvage

No. 173

Argued December 20, 1935
Decided January 13, 1936 *
297 U.S. 106

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

1. Upon appeal from an order of the Board of Tax Appeals sustaining a tax assessment, the Circuit Court of Appeals should confine itself to grounds which were presented to or considered by the Board. P. 108.

2. Stock of a corporation worth more than par was acquired from it by the taxpayer upon payment of par value in cash and in further consideration of an option to the corporation to repurchase part of the shares at par and of the taxpayer’s agreement not to compete with the corporation in business.

Held:

(1) That the taxpayer’s failure to report the profit at the time in his income tax return, due to an innocent mistake, did not estop him, when measuring the gain from a disposition of the shares in a later year, from claiming that their market value at time of purchase was greater than the cash price he had paid for them. P. 109.

(2) That the market value of the shares subject to the option of repurchase was necessarily limited to $100 per share. P. 109.

76 F.2d 112 affirmed.

Certiorari (cross-writs), 296 U.S. 557, to review a judgment reversing an order of the Board of Tax Appeals.