Analyze all or a portion of Taft v. Bowers, using the Issue, Rule, Application, and Conclusion methodology in your comments below. Remember to “Blue Book” where appropriate.
Taft v. Bowers, 278 US 470 – Supreme Court 1929
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Facts: A purchased stock at $!M. Stock appreciated to $2M at which point, A gave stock to B. B later sold stock at $5M.
Issue: What is B’s basis in the stock? At what amount should B pay taxes on?
Rule: Internal Revenue Code Sec. 1015
Application: Sec. 1015 gives B the same basis that A had prior to transfer.
Conclusion: B should be taxed for the full appreciation of $4M.