Facts
The [A.] Real Estate AG had taken over two distressed companies, [D. AG] and [E. AG] . The cantonal tax office concluded that the assets of these companies were overvalued in the merger balance sheets and that [A.] Real Estate AG had thereby provided a monetary benefit to its sole shareholder [B.] . Consequently, the tax office made corrections to the profit and capital tax assessments of [A.] Real Estate AG for the years 1995 and 1996. [A.] Real Estate AG and the Federal Tax Administration filed administrative court appeals against the decision of the Federal Tax Appeal Commission of the Canton of Zurich, which largely confirmed the corrections made by the tax office.Considerations
The Federal Supreme Court concluded that the book values of the acquired companies were indeed above the fair market value of the assets, which constituted an overvaluation. This overvaluation must be eliminated by a balance sheet correction to the detriment of equity. The adjustments of the value corrections on the acquired properties made by the tax authorities are therefore justified. However, the Federal Supreme Court held that from the perspective of [A.] …