TAXATION -INCOME TAX - PROFIT ON SALE OF SECURITIES - IDENTIFICATION OF SHARES SOLD

Authors

Milton A. Kramer, University of Michigan Law SchoolFollow

Abstract

The taxpayer ordered his broker to sell certain shares of stock purchased in March, 1929, which were on deposit at a bank. He then ordered the bank to deliver a thousand shares from certificates numbered 80250 to 80258 inclusive, and 80264. It does not appear whether the instructions were written or oral. The bank, however, delivered by mistake certificates from another lot which had a considerably lower cost basis and had been held as collateral since 1925. The Board of Tax Appeals concluded that the shares delivered to the broker as represented by the certificates were the shares actually sold by the petitioner, and computed the taxable gain upon the basis of the cost of those shares rather than on the cost of the shares which the petitioner intended to sell and had instructed the broker to sell. On appeal, held, the order of the Board of Tax Appeals should be affirmed, for in the situation herein presented the certificates were the best means of identification available. Davidson v. Commissioner, (U.S. 1938) 59 S. Ct. 43, affirming (C. C. A. 8th, 1938) 94 F. (2d) 300.

Recommended Citation

Milton A. Kramer, TAXATION -INCOME TAX - PROFIT ON SALE OF SECURITIES - IDENTIFICATION OF SHARES SOLD, 37 Mich. L. Rev. (1939).
Available at: https://repository.law.umich.edu/mlr/vol37/iss3/27