Before SWAIM and SCHNACKENBERG, Circuit Judges, and PLATT, District Judge.
The question in this case is whether or not under the agreed facts the Tax Court erred in determining that there had not been a tax free reorganization within the meaning of Section 112(b) (10) of the Internal Revenue Code of 1939, 26 U.S.C.A. § 112(b) (10) this being the only section which petitioner claimed to be applicable.
The petitioner in its brief expressly adopted the following statement and findings by the Tax Court of the stipulated facts:
"Goldstein Brothers, a partnership, operated a retail home furnishings business prior to May 1, 1923. On that date Goldstein Bros., Inc., herein referred to as the old corporation, was organized under the laws of Indiana. The stockholders were the members of the partnership and held the original stock in the same proportions as their interests in the partnership. The net assets of the partnership on that date amounted to $434,612.49. The closing balance sheet of the partnership was used as the opening balance sheet of the old corporation except that good will was set up on the books at a value of $280,000 and the outstanding issued capital stock amounted to $714,612.40. 1400 shares of stock of no par value were issued in exchange for the assets of the partnership. On April 14, 1932, 335 shares of preferred stock of $100 par value were issued.
"On January 13, 1934, the old corporation filed a voluntary petition in bankruptcy.
"In February 1934 the petitioner was organized under the name of Washington and Delaware Mercantile Company, with an authorized capital of 335 shares of preferred stock of $100 par value and 500 shares of common stock of no par value. The paid-in capital amounted to $33,500. The common stock was issued on December 31, 1935, to the former stockholders of the old corporation in the same proportions as their holdings in that corporation. This transaction was recorded on the petitioner's books as a debit to good will and credit to capital stock in the amount of $20,500.
"On February 26, 1934, the assets of the old corporation were sold at public auction by the trustee in bankruptcy to the petitioner for $48,025, which sale was approved by the referee in bankruptcy.
"The final report of the trustee in bankruptcy shows as follows:
Receipts of Trustee $60,112.62
Expenses of receiver corporation 1,844.87 $58,267.75