Commissioner of Internal Revenue v. Hyman H. Berghash and Rose Berghash, Commissioner of Internal Revenue v. Delavan-Bailey Drug Co., Inc.

LUMBARD, Chief Judge:

This appeal, taken pursuant to Section 7482 of the Internal Revenue Code of 1954, involves yet another in the Commissioner’s series of attempts to deal with the tax avoidance possibilities of reincorporation transactions by asking the courts to close the statutory loophole created by Sections 331 and 337 of the Code. 1 The appeal raises two specific questions: whether substantial cash distributions made by a corporation pursuant to a plan of complete liquidation should be taxed to the shareholders as a dividend, to the extent of the corporation’s earnings and profits,…