Howell v. Commissioner
United States Tax Court
Three individuals decided to acquire property as an investment. They formed a corporation in 1961 and caused it to purchase the land. The corporation had no other assets and received no income from the property. It filed an election in 1964 under sec. 1372, I.R.C. 1954, to be taxed as a small business corporation.
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Three individuals decided to acquire property as an investment. They formed a corporation in 1961 and caused it to purchase the land. The corporation had no other assets and received no income from the property. It filed an election in 1964 under sec. 1372, I.R.C. 1954, to be taxed as a small business corporation. In 1964, 1965, and 1966 the corporation sold the property in three transactions, with the first two being merely incidental to the final sale which disposed of over 90 percent of the tract of land. Held, (1) the fact that the corporation's only activity was the sale of the land does…
1DissentScott, J.
I respectfully disagree with the majority opinion, both in its conclusion that Hectare was not engaged in the trade or business of selling real property during the years here in issue and the conclusion that a corporation not engaged in an ordinary trade or business can elect to be “a small business corporation.”
While neither party argues that Hectare was not a viable corporation, I interpret respondent’s argument to rely heavily on the proposition that in order to be a viable corporation for Federal income tax purposes, the corporation must be engaged in a business activity or carrying on a…
2Cases cited15 opinions
- Moline Properties, Inc. v. CommissionerSupreme Court of the United States · 1943
- Corn Products Refining Co. v. CommissionerSupreme Court of the United States · 1956
- Higgins v. CommissionerSupreme Court of the United States · 1941
- United States v. Ada Belle Winthrop, Individually and as Under the Will of Guy L. Winthrop, DeceasedCourt of Appeals for the Fifth Circuit · 1969
- T. M. Britt and Jane Britt v. The United States of AmericaCourt of Appeals for the Fifth Circuit · 1970
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