G. A. Heft and Edna S. Heft v. Commissioner of Internal Revenue

WISDOM, Circuit Judge.

The tax question for decision in this case has to do with collapsible corporations. The taxpayers, Mr. and Mrs. G. A. Heft, on their joint returns for 1952, reported long-term capital gains representing liquidation distributions from the Gulf Construction Corporation, a company wholly owned by the Hefts. The Commissioner determined that the corporation was “collapsible” under Section 117(m) of the Internal Revenue Code of 1939, 26 U.S.C.A. § 117(m). Accordingly, he treated the gains as ordinary income and assessed a deficiency against the taxpayers. The Tax Court…