See American Law Institute, Federal Income, Estate and Gift Tax Project, Income Tax Problems of Corporations and Shareholders 138 (October 31, 1958) (hereinafter cited as A.L.I. 1958 Tax Project); Bittker, supra note 6, at 339-40; Michaelson, supra, at 21 n. 32. The courts have assumed that the "device" restriction requires inquiry into business purpose. See, e.g., Bondy v. Commissioner, 269 F.2d 463 (4 Cir. 1959). Many of the earlier cases in applying the business-purpose test to reorganizations gave credence only to those non-tax-avoidance purposes which benefited the corporations involved.

The tax consequences of the reorganization here involved must be determined by the provisions of the above-quoted subsection of the 1939 Code. Subsection (11) was added to subsection 112(b) of the Code by amendment in 1951, Public Law 183, approved October 20, 1951, c. 521, 65 Stat. 452, and, subsequently, has been superseded by § 355 of the Internal Revenue Code of 1954, 26 U.S.C.A. § 355. As a consequence of the short life of the statute under consideration, Bondy v. Commissioner, 4 Cir., 269 F.2d 463, is the only reported case found in which subsection (11) has been judicially construed. The taxpayer involved in that case was the sole stockholder of Market Motors, Inc., a corporation engaged in business as a Ford automobile dealer.

Assessing continuity of interest ultimately depends upon proof of beneficial ownership without regard to the existence or absence of legal title. See Bondy v. Commissioner, 269 F.2d 463, 466-67 (4th Cir. 1959); Commissioner v. National Bellas Hess, Inc., supra, 220 F.2d at 421. Cf. Kamborian v. Commissioner, 469 F.2d 219, 221-22 (1st Cir. 1972).

Inferentially petitioner would have us give no viability to that qualification. In their second category the petitioners rely upon Bondy v. Commissioner, 269 F.2d 463 (C.A. 4, 1959), reversing 30 T.C. 1037 (1958); Wilkins v. United States, 188 F. Supp. 91 (S.D. Ill. 1960); Parshelsky's Estate v. Commissioner, 303 F.2d 14 (C.A. 2, 1962), reversing 34 T.C. 946 (1960); and Murdock v. United States, an unreported case (W.D. Tenn. 1957, 52 A.F.T.R. 1626, 57-2 U.S.T.C. par. 9959), affirmed per curiam 263 F.2d 146 (C.A. 6, 1959). None of these cases are germane to the issue at bar.

Inferentially petitioner would have us give no viability to that qualification. In their second category the petitioners rely upon Bondy v. Commissioner, 269 F.2d 463 (C.A. 4, 1959), reversing 30 T.C. 1037 (1958); Wilkins v. United States, 188 FSupp. 91 (S.D. Ill. 1960); Parshelsky's Estate v. Commissioner, 303 F.2d 14 (C.A. 2, 1962), reversing 34 T.C. 946 (1960); and Murdock v. United States, an unreported case (W.D. Tenn. 1957, 52 A.F.T.R. 1626, 57-2 U.S.T.C. par. 9959), affirmed per curiam 263 F.2d 146 (C.A. 6, 1959). None of these cases are germane to the issue at bar.

The same result was reached in Perry E. Bondy, 30 T.C. 1037. That case, it is true, was reversed by the Court of Appeals for the Fourth Circuit, 269 F.2d 463. But as the following quotation (p. 466) will show, there was no difference of opinion as to the legal principles involved and the reversal was based purely on the reviewing court's interpretation of the facts: