The sale in 1964 of shares by a corporation to its sole shareholder at an undervalue gave rise to a benefit to the shareholder notwithstanding that the shares had been purchased at the same undervalue by the corporation from the shareholder two years earlier. "If it had not been for the 1964 resale, the individual would have continued in the relatively impoverished state that resulted from the 1962 sale. As a result of the 1964 resale he was restored to his relatively affluent state at the expense of the company and ... the company thereby conferred a benefit on him." Under the jurisprudence, it was irrelevant that "when an individual benefits a company whose stock is all owned by him or when such a company benefits the individual, the individual's overall net assets may well have neither increased nor diminished ... ."
A price adjustment clause did not negate (although it arguably reduced) the amount of the benefit, given that there was no bona fide attempt to estimate a fair market value sale price. "If, in fact, a company simply sold property to its sole shareholder on expressed terms that the price payable was an amount equal to fair market value and provided a fair manner to determine such value, I would agree ... that there could not, as a matter of law, be a benefit arising out of the sale."