Gaunt & Harris v. United States

110 F.2d 651, 24 A.F.T.R. (P-H) 554, 1940 U.S. App. LEXIS 4620

• Court: Court of Appeals for the Sixth Circuit
• Decided: February 15, 1940
• Docket: No. 8062
• Status: Published

Opinion

PER CURIAM.

It appearing that appellant sued to recover income taxes alleged to have been erroneously assessed for the tax year 1932; that appellant claimed a deduction for loss in said year sustained in consequence of a sale of shares of stock to two of its stockholders who owned all of-its 100 shares of capital stock, except 6 issued to their wives to qualify them as incorporators; that said stockholders had been partners in the insurance business for some ten years prior to 1930, when they procured appellant’s incorporation and conveyed to it the partnership assets, including said bank stock; that said stockholders in the latter- part of 1932 decided to dissolve said corporation and did so on December 31, 1932; that, on December IS, 1932, appellant conveyed said stock to said two majority stockholders and took their notes for an amount aggregating the unpaid balance of the purchase price thereof; that, upon dissolution of appellant, said stockholders continued the insurance business as partners; that the notes aforesaid were paid by charges against their personal accounts on the partnership books; and it appearing that it was claimed that the alleged sale of the stock aforesaid was a distribution of corporate assets and not a sale; and it appearing that there was substantial evidence to support the District Court’s finding of fact and conclusion of law that said transaction was a distribution of corporate assets and not a sale, it is ordered that the judgment of the District Court be affirmed.