Cate Ditch Co. v. United States

KUNZEL, District Judge.

This cause was submitted for decision upon written stipulation of facts, which facts are hereinafter set forth.

Cate Ditch Company is a California corporation organized to operate an irrigation ditch company for the benefit of its member stockholders; and from 1930 until 1956 it enjoyed the status of a tax-exempt corporation under I.R.C. § 501(c) (12), 26 U.S.C.A. § 501(c) (12). In 1956, contemplating dissolution, the taxpayer sold its pipelines, easements, and equipment, with the result that 91.66% of the corporation’s income for that year consisted of gains from the…