Commissioner of Revenue v. Shafner

The Shafners (taxpayers) were shareholders of a corporate business trust which adopted a plan of complete liquidation, sold all its assets, paid taxes on gains realized from those sales, and then distributed the remaining cash to its shareholders. This case presents the question whether, in those circumstances, the shareholders may be taxed on the final distributions received from the liquidated business trust. We hold that such distributions are excluded from taxable income as exempt dividends under G. L. c. 62, § 2 (a) (2) (D).

The Lynn Realty Trust (trust) was a Massachusetts corporate…