Webb v. Commissioner
United States Tax Court
In 1967 a controlled subsidiary corporation purchased from a decedent's estate a portion of the stock of the subsidiary's parent corporation in a transaction qualifying under sec. 303, I.R.C. 1954. The parent corporation was later liquidated and dissolved. Held, the parent corporation did not realize a dividend in 1967 from its subsidiary corporation under sec. 304(a)(2) and (b)( 2)(B), I.R.C. 1954, as a result of the purchase of its stock.
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In 1967 a controlled subsidiary corporation purchased from a decedent's estate a portion of the stock of the subsidiary's parent corporation in a transaction qualifying under sec. 303, I.R.C. 1954. The parent corporation was later liquidated and dissolved. Held, the parent corporation did not realize a dividend in 1967 from its subsidiary corporation under sec. 304(a)(2) and (b)( 2)(B), I.R.C. 1954, as a result of the purchase of its stock. Held, further, the parent corporation did not omit from its income tax return for 1967 a sum in excess of 25 percent of the gross income reported therein…
1DissentScott, J.
I respectfully disagree with the conclusion of the majority that where funds of a subsidiary corporation are used to acquire stock of its parent from its parent’s stockholder the transaction is to be treated under section 304(a)(2) and (b)(2)(B) as a purchase of an asset by the subsidiary for all purposes except determining the amount, if any, of the dividend received by the stockholder of the parent corporation. In my view this holding ignores the intent of Congress in enacting the predecessor of section 304(a)(2) and (b)(2)(B) to close the "loophole” created by the decision in Rodman…
2Cases cited5 opinions
- United States v. DavisSupreme Court of the United States · 1970
- George R. Tollefsen and Margaret A. Tollefsen v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1970
- Commissioner of Internal Revenue v. Trustees Common Stock John Wanamaker PhiladelphiaCourt of Appeals for the Third Circuit · 1949
- Union Bankers Ins. Co. v. CommissionerUnited States Tax Court · 1975
- Pittsburgh Laundry, Inc. v. CommissionerUnited States Board of Tax Appeals · 1942