Young v. Commissioner
United States Tax Court
Petitioner, a minority stockholder in a close corporation, agreed to the sale of assets of the corporation in 1927 for purposes of liquidation. Stock was surrendered in 1939 by petitioner with reservation rights.
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Petitioner, a minority stockholder in a close corporation, agreed to the sale of assets of the corporation in 1927 for purposes of liquidation. Stock was surrendered in 1939 by petitioner with reservation rights. Action in the nature of an accounting and for distribution of proportionate share of proceeds from sale of assets was brought against the majority stockholder in 1942. Judgment was obtained in 1943 awarding petitioner proportionate distribution of proceeds from sale of assets less amounts previously distributed as liquidating dividends. Held, net amount of judgment award recovered in…
1Opinion of the Court
OPINION.
Johnson, Judge:
The only question for our determination is whether the net amount of $36,164.15 recovered by petitioner in 1943 as a judgment award is taxable to petitioner as ordinary income or capital gain.
It is well settled that, for tax purposes, the character of an amount recovered as a result of litigation is determined by the nature of the action brought. United States v. Safety Gar Heating & Lighting Co. (1936), 297 U. S. 88. And as stated in Raytheon Production Corp. v. Commissioner (C. A. 1, 1944), 144 F. 2d 110, affirming 1 T. C. 952, “The test is not whether the action was…
2Cases cited8 opinions
- Dobson v. CommissionerSupreme Court of the United States · 1944
- United States v. Safety Car Heating & Lighting Co.Supreme Court of the United States · 1936
- Raytheon Production Corp. v. Commissioner of Int. Rev.Court of Appeals for the First Circuit · 1944
- Megargel v. CommissionerUnited States Tax Court · 1944
- Farmers' & Merchants' Bank of Catlettsburg, KY. v. Commissioner of Internal RevenueCourt of Appeals for the Sixth Circuit · 1932
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3Cited by3 opinions
- McKim v. CommissionerUnited States Tax Court · 1980
- WOLFSON v. COMMISSIONERUnited States Tax Court · 1978
- Young v. CommissionerUnited States Tax Court · 1951