(dissenting).
In the case at bar the Commissioner ruled that the cost basis of certain property acquired by the petitioner in 1932 and sold by it in 1935 should be reduced by the sum of $69,699.88, and thereafter assessed a tax deficiency against the petitioner in the sum of $4,436.40.
The facts are as follows: Three corporations, constituting all of the stockholders of the petitioner, were creditors in the sum of $79,355.51 of Robert F. Hobbs, Inc., a bankrupt. The three corporations purchased the property of the bankrupt at a bankruptcy sale, paying therefor the sum of $14,955 in cash and, as additional consideration, assumed a mortgage of $38,000. It is admitted that the funds paid the receiver in bankruptcy of Hobbs, Inc., by the three corporations were paid by each in the proportion of the respective amounts of their claims to the total amount of their claims as these were allowed in the bankruptcy estate, and that the shares of the petitioner’s capital stock were issued to each of the three-corporations respectively in the same proportions in respect to the assets purchased. The resolution of the board of directors of the petitioner authorizing the purchase *214by it of the assets of the bankrupt from the three corporations is not a part of the record. I think it is fair to assume, however, in view of the determination of the Commissioner, and in the absence of any showing or contention to the contrary, that the consideration moving from the petitioner for the acquisition of the assets in question was the equivalent of that received by the receiver from the three corporations.
In 1933 the petitioner sold the assets thus acquired by it from its three stockholders, creditors of Hobbs, Inc., and now contends that in computing its income for that taxable year it is entitled to use as a cost basis not the sum of $52,955 (the total of the cash consideration paid plus the amount of the mortgage assumed) but the sum of the claims of the three corporations' against the bankrupt plus $52,955, less the sums received by the corporations by way of dividends on their claims in the bankruptcy proceeding. The difference between these two cost bases is approximately $69,-699.88. The Commissioner adopted as the cost basis of the assets to the petitioner the sum of $52,955. The Board affirmed this ruling.
The rulings of the Commissioner and the Board in this respect were correct. The three corporations were merely the purchasers of assets sold at the bankruptcy sale of Hobbs, Inc., and the fact that they were creditors had no legal bearing upon that purchase. Their claims did not constitute a portion of the consideration paid by them and the position here taken by the petitioner that it may bring itself within the reorganization provisions of the Statute is at variance with the existing law. There is no foundation in fact for such a contention and there existed no continuity of interest whatsoever between the petitioner and the bankrupt. What occurred here was more than a mere change in identity or form. There was an outright sale of assets in accordance with the Bankruptcy Act, 11 U.S.C.A. § 1 et seq., and an outright purchase of those assets by the three corporations. The basis for gain or loss to the petitioner upon the sale of the assets acquired by it in 1932 must be estimated as the cost of the assets to the three corporations as provided by Sections 112(b) (5) and 113(a) (8) of the Revenue Act of 1932, 26 U.S.C.A. §§ 112(b) (5) and 113 note.
It follows that if the Commissioner is not barred by any statute of limitations to assess the deficiencies in tax against the petitioner, the decision of the Board must be sustained. The petitioner contends that the statute of limitations contained in Section 275(b)' of the Revenue Act of 1932, 26 U.S.C.A. § 275 (b), bars the assessment here made by the Commissioner and affirmed by the Board. The Commissioner contends that the petitioner had not complied with the conditions of Section 275(b) and that precise and “meticulous compliance” is required in order that the petitioner-may avail itself of the period of limitation prescribed by the Act.
Upon January 17,1934, the petitioner Shed its return for the year 1933 and upon the face of the return appeared the following: “Final return. Examination desired so that Company may dissolve.” Upon April 23, 1934, the Collector wrote to the Commissioner, enclosing the return and stating that the return was “ * * * being forwarded to the Bureau promptly as the taxpayer desires a final examination in order that the Company may dissolve.” On October 24, 1934, the petitioner wrote to the Commissioner stating, “Upon several previous occasions we have written the Camden office and your office asking if we might have an audit of the income tax report of the Beverly Wall Paper Company, * * * as we are anxious to wind up the affairs of this Company.” Upon October 26,1934, the Commissioner acknowledged receipt of the petitioner’s letter of October 24, 1934, stating, “ * * * In reply you are advised that your return was forwarded to the Internal Revenue Agent in charge, Newark, New Jersey, for verification, under date of June 28, 1934.” On October 24, 1935, the Commissioner mailed a deficiency notice to -the petitioner, the amount of the deficiency being stated at $4,436.40.1
The corporation was in actual process of dissolution at the time of the filing of its return upon January 17, 1934, and had been in process of dissolution for some time prior thereto. $33,000 by way of liquidated dividends had been paid to the stockholders prior to December 31, 1933. On February 13, 1934, another liquidating dividend of $2,000 was paid to the stockholders, and on October 5, 1935, a final liquidating dividend of $2,669.59 was paid. The dissolution of *215the corporation was therefore completed upon the date last referred to.
■The Commissioner makes a number of contentions to the effect that the petitioner has not given him the notice required by the Statute. I shall deal with only one of these, but one which I think is sufficient to resolve the issue in his favor. The Commissioner contends that notice was not given him by the petitioner that it contemplated dissolution at or before the expiration of the year. The petitioner for its part urges that the use by it of the phrase “Final return. Examination desired so that Company may dissolve” upon the face of its return must have indicated to the Commissioner that there were to be no other or further returns, that if the corporation contemplated continued existence another return or .other returns would be necessary and that therefore, by inference at least, the Commissioner was compelled to assume that the corporation contemplated dissolution with the year. The petitioner also takes the position that in view of the fact that the return itself showed that liquidating dividends had already been paid and that the balance of such dividends was to be paid as soon as possible, the Commissionér was put upon notice that the dissolution of the corporation was to be immediate. '
I cannot accept these contentions. Subsection (1) of Section 275(b), 26 U.S.C.A. § 275(b), states that the written request of the taxpayer must notify the Commissioner that the corporation contemplates dissolution at or before the expiration of the year. By the express terms of the Statute the notice must be given to the Commissioner. Such notice cannot be aided by the contents of the return itself for the Commissioner cannot-be compelled to examine taxpayers’ returns to ascertain if within them are facts from which knowledge of contemplated dissolution within the year may be drawn. In my opinion the Commissioner was entitled to notice in unequivocal language of the contemplated dissolution of the corporation within the year, and not by implication or inference.
Such notice can be given to the Commissioner only by precise and meticulous compliance with the Statute. Florsheim Bros. Dry Goods Co. v. United States, 280 U.S. 453, 50 S.Ct. 215, 74 L.Ed. 542; Lucas v. Pilliod Lumber Co., 281 U.S. 245, 249, 50 S.Ct. 297, 299, 74 L.Ed. 829, 67 A.L.R. 1350; Esperson v. Commissioner, 13 B.T.A. 596, affirmed, 5 Cir., 49 F.2d 259, certiorari denied Esperson v. Burnet, 284 U.S. 658, 52 S.Ct. 36, 76 L.Ed. 558.
In the case at bar the petitioner has not met the requirements of the Statute and .for this reason the period of limitation imposed by the Statute should-not bar recovery by the Commissioner.
For the reasons given I think that the opinion of the Board of Tax Appeals should be affirmed and I therefore must respectfully dissent from the opinion of the majority.
It should be' noted that even if the petitioner’s letter of October 24, 1934, to the Commissioner be deemed to be sufficient notice within the statute, none the less -the assessment was made within the year. ■