BLOOMINGTON COCA-COLA BOTTLING CO. V. COMMISSIONER
189 F.2d 14 (7th Circuit 1951)
NATURE OF THE CASE: Bloomington (P) appealed a decision of the Tax Court which upheld the
Commissioner's determination that in 1939 the taxpayer sustained a loss upon the sale of
real estate which did not come within the scope of 112(b)(1) of the Internal Revenue Code,
26 U.S.C.A.
FACTS: In 1930 P, at a cost of $36,000, acquired a bottling plant in Bloomington,
Illinois- allocating $30,500 to buildings and $5,500 to land. In 1938, P decided to build a
new plant. It decided it had no use for the old plant and wished to dispose of it. P entered
into a contract with a contractor to construct a new plant. The new plant was completed in
1939. The contractor furnished the necessary material and labor, and completed the building
in accordance with the plans and specifications prepared by its architect for a total of
$72,500. Of this sum the contractor was paid $64,500 in cash and accepted taxpayer's old
buildings and the land upon which the old plant was located at a valuation of $8,000, and
the old building and land were transferred to the contractor. The Commissioner adjusted the
average base period net income for the year 1939 as computed by the taxpayer by deducting
the amount of $22,886.79 as a loss not coming within the scope of Sec. 112(b)(1) of the
Internal Revenue Code. This resulted in a deficiency of $8,049.19 in 1943 and $8,492.13 in
1944. P contested this determination. The Tax Court, finding the facts in detail, sustained
the Commissioner.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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