United States v. Cumberland Public Service Co.

115 Ct. Cl. 837, 113 Ct. Cl. 460

• Court: Supreme Court of the United States
• Decided: January 9, 1950
• Docket: No. 46963
• Status: Published

Opinion

On writ of certiorari (338 U. S. 846) to review a judgment of the Court of Claims holding that where upon the evidence adduced the sale of corporate assets had in fact been made by the stockholders who had first offered to sell their stock and then, in accordance with a counter offer, caused a liquidation of the corporation and distribution of its assets in kind, the gain on the sale was not to be imputed to the corporation. "

The decision of the Court of Claims was affirmed by the Supreme Court Jánuary 9,'1950, in an opinion by Mr. Justice Black.

The syllabus of the Supreme Court’s decision is as follows-:

A closely held corporation made to its shareholders a distribution of assets in kind and was dissolved. The stockholders, transferred the property to a purchaser. In an action by the corporation for refund of a capital gains tax on the sale, the Court of Claims found, upon proper supporting evidence, that the sale was' tíiade by the shareholders rather than by the corporation, and entered judgment for the corporation. Held: The record does not require a finding that the sale was made by the corporation rather than by the shareholders, and the judgment of the Court of Claims is affirmed. Commissioner v. Court Holding Co., 324 U. S. 331, distinguished.

(a) A corporation may liquidate or dissolve without subjecting itself to the corporate gains tax, even though a primary motive is to avoid the burden of corporate taxation.

(b) In this case it was for the Court of Claims (the trial court), upon consideration of the entire transaction, to determine the factual category in which the transaction belonged.

Mr. Justice Douglas took no part in the consideration or decision of this case.