In view of this concession, the surprise was harmless error, and we believe that the cases which allow decision by the Tax Court on a ground raised at or after hearing where the pertinent facts are in the record apply here. Moore v. Commissioner of Internal Revenue, supra; Bard-Parker Co., 1952, 18 T.C. 1255, affirmed 2 Cir., 1954, 218 F.2d 52; Standard Oil Co. 1941, 43 B.T.A. 973, affirmed 7 Cir., 1942, 129 F.2d 363. On the issue of lack of proof that the petitioners sustained a loss, we agree with the Tax Court that, in view of the disclosed relationship between petitioners and American Associates, Inc., the record is insufficient to show that a loss was sustained by petitioners in the transaction, rather than that a contribution was made by petitioners to a corporation in which they had an interest.

Warner Co., 11 T.C. 419; Palomar Laundry Co., 7 T.C. 1300. In Bard-Parker Co. v. Commissioner, 2 Cir., 218 F.2d 52, affirming 18 T.C. 1255, the Court said, 218 F.2d at page 58: "* * * We think the Tax Court correctly excluded, from taxpayer's 'equity invested capital,' the market value of the shares of common stock issued to Ladd in exchange for services.

As such, we do not feel that either Parkinson or Hildred can be regarded as having stepped into the preliquidation shoes of the decedent (or his estate) so as to succeed to his former proprietary interest in Lammerts (Old). Our finding is to be contrasted with the holding of the Second Circuit in Bard-Parker Co. v. Commissioner, 218 F.2d 52 (C.A. 2, 1954), affirming 18 T.C. 1255 (1952), certiorari denied 349 U.S. 906 (1955), which is urged upon us by respondent. There it was held that liquidation trustees served merely as a ‘conduit’ through which title to the assets of the transferring corporation passed to the acquiring corporation in a tax-free reorganization.

It is well established that a technical liquidation of a corporation may be merely a step that is incidental to a statutory reorganization. See, for example, Survaunt v. Commissioner, 162 F.2d 753, affirming 5 T.C. 665; Liddon v. Commissioner, 230 F.2d 304, modifying on other grounds 22 T.C. 1220, certiorari denied 352 U.S. 824 (1956); Pebble Springs Distilling Co. v. Commissioner, 231 F.2d 288 (C.A. 7), affirming 23 T.C. 196, certiorari denied 352 U.S. 836 (1956); Lewis v. Commissioner, 176 F.2d 646 (C.A. 1), affirming 10 T.C. 1080; Love v. Commissioner, 113 F.2d 236 (C.A. 3), affirming 39 B.T.A. 172; Estate of Elsie W. Hill, 10 T.C. 1090 (1948); Becher v. Commissioner, 221 F.2d 252 (C.A. 2), affirming 22 T.C. 932; Bard-Parker Co., 18 T.C. 1255 (1952), affd. 218 F.2d 52 (C.A. 2), certiorari denied 349 U.S. 906 (1955). Also, this same principle has been adopted by the Treasury in section 1.331-1(c), Income Tax Regs., wherein it is stated:

It is well established that a technical liquidation of a corporation may be merely a step that is incidental to a statutory reorganization. See, for example, Survaunt v. Commissioner, 162 F.2d 753, affirming 5 T.C. 665; Liddon v. Commissioner, 230 F.2d 304, modifying on other grounds 22 T.C. 1220, certiorari denied 352 U.S. 824 (1956); Pebble Springs Distilling Co. v. Commissioner, 231 F.2d 288 (C.A. 7), affirming 23 T.C. 196, certiorari denied 352 U.S. 836 (1956); Lewis v. Commissioner, 176 F.2d 646 (C.A. 1), affirming 10 T.C. 1080; Love v. Commissioner, 113 F.2d 236 (C.A. 3), affirming 39 B. T. A. 172; Estate of Elsie W. Hill, 10 T.C. 1090 (1948); Becher v. Commissioner, 221 F.2d 252 (C.A. 2), affirming 22 T.C. 932; Bard-Parker Co., 18 T.C. 1255 (1952), affd. 218 F.2d 52 (C.A. 2), certiorari denied 349 U.S. 906 (1955). Also, this same principle has been adopted by the Treasury in section 1.331-1 (c), Income Tax Regs., wherein it is stated:

The business of Capital was carried on by the two new corporations. Moreover, there can be a liquidation of the old corporation incidental to the reorganization, Bard-Parker Co., 18 T.C. 1255, affd. 218 F.2d 52; Estate of John B. Lewis, 10 T.C. 1080, affd. 176 F.2d 646. The motives of the stockholders are immaterial if there has been, in fact, a reorganization.