Mathis v. Commissioner
United States Tax Court
In 1927, Corporation A, an Alabama corporation, was dissolved to "get rid of" Alabama taxes. Nine months later, Corporation B was organized by the former majority stockholder of Corporation A in order to give his family interests in various properties. Assets formerly owned by Corporation A and other assets were transferred to Corporation B, and stock was issued to petitioner, her father (the majority stockholder of Corporation A), and various members of the family.
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In 1927, Corporation A, an Alabama corporation, was dissolved to "get rid of" Alabama taxes. Nine months later, Corporation B was organized by the former majority stockholder of Corporation A in order to give his family interests in various properties. Assets formerly owned by Corporation A and other assets were transferred to Corporation B, and stock was issued to petitioner, her father (the majority stockholder of Corporation A), and various members of the family. The respondent determined that the transactions constituted a tax-free reorganization and that, consequently, the surplus of…
1Opinion of the Court
OPINION.
Rice, Judge:
The basic question to be decided is whether there was a reorganization in 1928 under the provisions of section 112 (i) (1) (B) or (D) of the Revenue Act of 1928,1 resulting in a nontaxable gain under the provisions of section 112 (b) (3) or (4) of the Revenue Act of 1928.2 If the dissolution of the Company and.the formation of the Corporation constituted a tax-free reorganization under the above cited sections, the earned surplus of the Company would constitute earned surplus of the Corporation. In such case, there would have been sufficient accumulated net earnings and…
2Cases cited2 opinions
- Wilgard Realty Co. v. Commissioner of Internal Rev.Court of Appeals for the Second Circuit · 1942
- Morley Cypress Trust, Schedule "B" v. CommissionerUnited States Tax Court · 1944
3Cited by15 opinions
- Moffatt v. CommissionerUnited States Tax Court · 1964
- Liddon v. CommissionerUnited States Tax Court · 1954
- Kind v. CommissionerUnited States Tax Court · 1970
- Resorts International, Inc. v. CommissionerUnited States Tax Court · 1973
- Kimble Glass Co. v. CommissionerUnited States Tax Court · 1961
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