Owen Josephus Roberts

“ The respondent in No. 486 is a Pennsylvania corporation supplying electric light and power in that state and also operating, through subsidiaries, a system which serves communities in Pennsylvania and Maryland. It filed consolidated returns for itself and its subsidiaries for 1927 and 1928. During 1928 the company retired certain bonds of Pennsylvania corporations which were formerly subsidiaries whose obligations the taxpayer had assumed when it took over their assets by transfers effected pursuant to an Act of the General Assembly of April 29, 1874, as amended and supplemented. ”

“ This act contemplates the issue of letters patent to the consolidated corporation, and the issue of new stock by it, in lieu of that of the old. The procedure under the Act of 1874 has repeatedly been referred to in the decisions of the Supreme Court of the Commonwealth as the 'short form' and that under the Act of 1909 as the 'long form' of merger. [13]
Inasmuch as the transfer of the franchises and assets is authorized by statute, it seems reasonably clear that the transferee is, as matter of law, liable for the obligation of the transferor. The cases indicate that this is so. ”

“ When these obligations were redeemed there existed, with respect to them, unamortized discount and expense aggregating $752,481.26, which the company in its return deducted from gross income. The Commissioner ruled against the deduction and determined a deficiency. The Board of Tax Appeals sustained the Commissioner. ”