Rust Communications Group, Inc. v. United States

OPINION

RADER, Judge.

In this tax refund action, plaintiffs — a closely held corporation and shareholders— challenge the tax consequences of the sale of the corporation’s radio stations. Plaintiff corporation, Rust Communications Group (Communications), transferred the stations to shareholders in the form of a partial liquidation. The shareholders then sold the stations to purchasers.

The Internal Revenue Service (IRS) considered plaintiffs’ transaction a sale of assets by the corporation. Therefore the IRS taxed the corporation on gains. According to plaintiffs, however, the shareholders…