Koch v. Commissioner of Revenue

William I. Koch (taxpayer), a Massachusetts resident, reported on his Federal income tax return for 1983 a net long-term capital gain of $275,349,470 from-25 Subchapter S corporations which were incorporated in Delaware and did no business in Massachusetts. Internal Revenue Code § 1366, 26 U.S.C. § 1366 (1993), which in substance was also the provision in effect in 1983, allows gains or losses from a Subchapter S corporation to pass through a corporation and be attributed directly to its shareholders. In contrast, Massachusetts, in 1983, attributed Subchapter S income to the corporation. G.…