Switlik v. Commissioner
United States Tax Court
Stockholders of corporation received distributions in complete liquidation in 1941 and each reported his pro rata share in his income tax return for that year as a long term capital gain.
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Stockholders of corporation received distributions in complete liquidation in 1941 and each reported his pro rata share in his income tax return for that year as a long term capital gain. In 1944 the stockholders paid their liability as transferees for deficiencies in tax which the Commissioner, in 1942, determined the corporation owed for the years 1940 and 1941. Held, losses sustained by stockholders as a result of payments made in 1944 are deductible in that year as ordinary losses and not as capital losses.
1Opinion of the Court
OPINION
HaRlan, Judge:
Petitioners contend that each of them is entitled to claim as an ordinary loss, deductible in full, the amount he or she paid in satisfaction of transferee liability. The respondent contends that the payment made by each petitioner grew out of, was related to, and took its character from a capital transaction, i. e., a long term capital gain, that it was in effect a reversal of this transaction, and, therefore, should be subjected to the same limitation as the original transaction. He concedes that each petitioner who contributed to the satisfaction of the transferee…
2Cases cited2 opinions
- North American Oil Consolidated v. BurnetSupreme Court of the United States · 1932
- Koppers Co. v. CommissionerUnited States Tax Court · 1944
3Cited by16 opinions
- Merchants Nat'l Bank v. CommissionerUnited States Tax Court · 1950
- Pittman v. CommissionerUnited States Tax Court · 1950
- Milliken v. CommissionerUnited States Tax Court · 1950
- Commissioner of Internal Revenue v. Arrowsmith Commissioner of Internal Revenue v. VivianCourt of Appeals for the Second Circuit · 1952
- Duveen Bros., Inc. v. CommissionerUnited States Tax Court · 1951
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