Supreme Court of the United States
United States v. Cumberland Public Service Co.
January 9, 1950338 U.S. 451
Summary
Justice Black's opinion for the Court affirmed the Court of Claims' judgment allowing the corporation to recover the capital gains tax assessed against it. A sale by shareholders following a genuine liquidating distribution cannot be attributed to the corporation merely because avoiding corporate taxation motivated the transaction. Whether a transaction constitutes a corporate sale or a genuine liquidation followed by a shareholder sale is a factual determination based on the entire transaction, and the Court accepted the trial court's adequately supported findings. The Court explained that Commissioner v. Court Holding Co. did not require a contrary result. There were no separate opinions. Justice Douglas did not participate.
Holding
- Attribution of a shareholder sale following a tax-motivated corporate liquidation.. Sales of property by shareholders following a genuine liquidating distribution cannot be attributed to the corporation for tax purposes merely because avoiding corporate taxation was a primary motive.
- The effect of the trial court's findings concerning who made the sale.. The Court accepted the Court of Claims' adequately supported finding that the shareholders, rather than the corporation, made the sale.
Docket 214
Cited authorities
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