Garlock, Inc. v. Commissioner
United States Tax Court
Petitioner sought to divest itself of voting control of a "controlled foreign corporation" as defined in sec. 957(a) by causing the corporation to issue so-called voting preferred stock for sale to foreign investors, thereby reducing petitioner's ownership to 50 percent of the combined voting power of all classes of stock.
Read the full summary
Petitioner sought to divest itself of voting control of a "controlled foreign corporation" as defined in sec. 957(a) by causing the corporation to issue so-called voting preferred stock for sale to foreign investors, thereby reducing petitioner's ownership to 50 percent of the combined voting power of all classes of stock. Held: 1. In determining whether a foreign corporation is a "controlled foreign corporation" as defined in sec. 957(a), a mechanical determination of voting power through stock ownership is not sufficient. 2. More than a formal transfer or issuance of voting stock without…
1Opinion of the Court
Quealy, Judge:
The respondent determined deficiencies in the Federal income tax of the petitioner as follows:
Tear ended Deficiency
Dec. 27, 1964. .$93,335.83
Dec. 26, 1965. . 27,061.49
Concessions having been made, the issues presented for decision are:(1) Whether Garlock, S.A., a Panamanian corporation, was a controlled foreign corporation within the meaning of section 957(a) of the Internal Revenue Code of 1954,1 as amended;(2) Whether section 951 of the Internal Revenue Code of 1954, as amended, is unconstitutional.
FINDINGS OF FACT
Some of the facts have been stipulated. The stipulation of…
2Cases cited11 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- Commissioner v. Court Holding Co.Supreme Court of the United States · 1945
- Higgins v. SmithSupreme Court of the United States · 1940
- Corliss v. BowersSupreme Court of the United States · 1930
- Helvering v. National Grocery Co.Supreme Court of the United States · 1938
6 more not listed; retrieve them via the Exa API.
3Cited by23 opinions
- Dougherty v. CommissionerUnited States Tax Court · 1973
- American Air Filter Co. v. CommissionerUnited States Tax Court · 1983
- Garlock, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1973
- Estate of Whitlock v. CommissionerUnited States Tax Court · 1972
- Kraus v. CommissionerUnited States Tax Court · 1973
18 more not listed; retrieve them via the Exa API.