TAXATION-FEDERAL INCOME TAX-STATUS OF PAYMENT OF CORPORATE LIABILITY BY STOCKHOLDER SUBSEQUENT TO LIQUIDATION

Authors

George V. Burbach S.Ed., University of Michigan Law School

Abstract

Petitioners, from 1937 to 1940, received distributions from the liquidation of a corporation of which they were stockholders and reported the profits thus obtained, classifying them as capital gains pursuant to I.R.C., §115. In 1944, a judgment was rendered against the corporation. Petitioners, as transferees, paid the judgment and took a deduction of 100 per cent, classifying the amount paid as an ordinary business loss. The Commissioner took a contrary position, and held the payment a capital loss. The Tax Court upheld the petitioners' contention but the court of appeals reversed. On appeal, held, affirmed, three Justices dissenting. The payment should be viewed as a part of the original liquidation transaction requiring classification as a capital loss. Arrowsmith and Bauer v. Commissioner of Internal Revenue, (U.S. 1952) 73 S.Ct. 71.

Recommended Citation

George V. Burbach S.Ed., TAXATION-FEDERAL INCOME TAX-STATUS OF PAYMENT OF CORPORATE LIABILITY BY STOCKHOLDER SUBSEQUENT TO LIQUIDATION, 51 Mich. L. Rev. 758 (1953).
Available at: https://repository.law.umich.edu/mlr/vol51/iss5/18