GREGORY V. HELVERING
293 U.S. 465 (1935)
NATURE OF THE CASE: This was a dispute over a corporate reorganization and stock
liquidation whose only purpose was to avoid taxes. Certiorari to review a judgment reversing
a decision of the Board of Tax Appeals, which set aside an order of the Commissioner
determining a deficiency in income tax.
FACTS: Petitioner (P) was the owner of all the stock of United Mortgage. United held
1,000 shares of Monitor Securities Corporation. In order to transfer the shares to herself
and to avoid the income tax from a direct transfer by way of dividend, P sought to
reorganize under 386(a)(1)(D). P organized the Averill Corporation in Delaware and three
days later transferred the 1,000 share of Monitor stock. Averill was then dissolved almost
immediately and the shares were distributed to P. No other business was ever transacted and
P immediately sold the shares for $133,333.33. She reported the gain as capital. The
Commissioner held that the reorganization was without substance and held that P was liable
for tax as though United had paid her a dividend.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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