
88 F.2d 616 (1937)
KRAUS
v.
COMMISSIONER OF INTERNAL REVENUE.
No. 232.
Circuit Court of Appeals, Second Circuit.
March 8, 1937.
*617 Henry P. Molloy, of New York City (Melvin J. France, of New York City, of counsel), for petitioner.
James W. Morris, Asst. Atty. Gen., and Sewall Key and Harry Marselli, Sp. Assts. to the Atty. Gen., for respondent.
Before L. HAND, SWAN, and CHASE, Circuit Judges.
CHASE, Circuit Judge (after stating the facts as above).
The dispute between the petitioner and respondent concerns only the proper cost basis of the stock sold. The petitioner insists that it should be at the average cost per share of his holdings acquired throughout the years up to the time of sale while the respondent applied the first in, first out rule in determining the deficiency. Article 58 of Reg. 74.
It may be taken as established that if the petitioner were able to identify the stock he sold with any particular stock he acquired that he would be entitled to take the basis of that stock so identified as the basis of the shares sold. Section 113 (a) (6) Revenue Act of 1928, 26 U.S.C.A. § 113 note. We agree that he acquired the shares he sold in a nontaxable exchange of stock for stock in a reorganization. Section 112 (b) (3) Revenue Act of 1928, 26 U.S.C.A. § 112 (b) (3) and note. He had the right to sell whatever stock he desired and the right of course to have the taxable gain, if any, computed on the basis of the cost of the particular shares which he elected to sell. The weakness of his objection to the action of the respondent lies in the fact that he did not take steps which would enable him to identify the shares sold with any particular shares he acquired at any definite cost. Consequently it is of no avail to him to show merely acquisition under such circumstances that the stock sold should be given the basis of some of the stock for which he acquired it on the exchange he made for he exchanged then many shares of old stock for the new. He must prove such identification of new shares sold with specific old shares that the basis of those old shares can be known. The old shares had been acquired by him at different times and at different prices, and, when all were turned in indiscriminately for an aggregate amount of new shares with no allocation of new shares to old, it became impossible to tell whether any particular new shares were exchanged for any particular old shares rather than for some other old shares. Moreover, it has been justifiably found by the Board that the petitioner made no allocation of new shares to old. It is quite true that the first in, first out rule is applicable only when there is no identification of shares sold with shares purchased. Helvering v. Rankin, 295 U.S. 123, 55 S.Ct. 732, 79 L.Ed. 1343; Skinner v. Eaton, 45 F.(2d) 568 (C.C.A.2). And equally true that stock certificates are not the only means of identification. A direction to a broker to sell shares designated by date of purchase and price paid will be sufficient to establish identity of the stock sold for determining the cost basis of it even though the broker actually delivers other certificates than those he was directed to sell, but *618 intention without more is not designation. Miller v. Commissioner, 80 F.(2d) 219, (C.C.A.2). See, also, Fuller v. Commissioner (C.C.A.) 81 F.(2d) 176.
But, notwithstanding this, the petitioner insists that as he has shown that all the shares he sold were acquired at one time in a nontaxable exchange of stock for stock he is entitled to the average cost of the old shares as a basis for the new. See Commissioner v. Von Gunten (C.C.A.) 76 F.(2d) 670, Commissioner v. Oliver (C.C. A.) 78 F.(2d) 561, and Commissioner v. Bolender (C.C.A.) 82 F.(2d) 591. See, also, Helvering v. Stifel (C.C.A.) 75 F.(2d) 583. All these cases, however, dealt with nontaxable exchanges of stock for stock in one or more corporations other than the one whose stock was given up in the exchange. We think that distinguishes those cases from the present one, but, however that may be, we are not prepared to extend the rule of them to an instance like this where old stock was merely exchanged for new stock in the same corporation. The fact that the new shares were four times as numerous as the old because their par value was only one-fourth as much did not change the situation for present purposes from what it would have been had the old certificates merely been surrendered for new certificates for a like aggregate number of shares; there being no change in par value. Had there been no identification of new shares with old such an exchange would have made it possible, if the petitioner's view is sound, for him to have sold any new shares and be taxed for any gain on the basis of average cost of the old though he couldn't have sold any of the old ones and computed his taxable income, if any, except either by applying the first in first out rule of article 58 of Reg. 74 or proving the cost of the shares actually sold. It may well be doubted whether one may so easily avoid at will a computation of taxable income on the basis of actual cost of the shares sold or in accordance with the first in, first out rule and get the benefit of average cost as a basis whenever that is desired. It is apparent that any exchange of stock in one corporation for a like number of shares of the same kind of stock in the same corporation merely changes certificates and leaves the holder in the same financial position as before. It must always be a nontaxable exchange in fact. So in our opinion the exchange through which the petitioner acquired the new shares he sold merely left his taxable status on a sale of them the same that it would have been had he retained his old shares and sold some of them. Compare Perkins v. United States (Ct.Cl.) 12 F.Supp. 481; Vawter v. Commissioner (C.C.A.) 83 F.(2d) 11. He had either to identify the new shares sold with particular old ones so as to show actual cost or be taxed on the basis upon which his taxes have been determined.
Affirmed.
