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Helvering v. Credit Alliance Corp., 316 U.S. 107 (1942)

Helvering v. Credit Alliance Corp.

No. 708

Argued April 7, 1942

Decided April 27, 1942

316 U.S. 107


1. Under § 27(f) of the Revenue Act of 1936, a distribution in liquidation of surplus accumulated since February 28, 1913, is to be treated, in computing the dividends-paid credit for the purpose of the tax imposed by § 14 on undistributed net income, as a taxable dividend paid. P. 316 U. S. 110.

So held although, under § 112(b)(6), the distribution resulted in no gain or loss to the distributee for tax purposes, and although the distributee did not, in the tax year of such distribution, distribute to its stockholders any part of the distribution, and did not apportion or allocate to the distributor any part thereof.

2. The clause "properly chargeable to the earnings or profits accumulated after February 28, 1913" in subsection 27(f) refers to the

Page 316 U. S. 108

earnings or profits of the distributor, not to those of the distributee. P. 316 U. S. 111.

3. Subsection (h) of § 27 of the Revenue Act of 1936, dealing with "nontaxable distributions," is inapplicable to the facts of this case, and does not preclude the application here of subsection (f). P. 316 U. S. 112.

4. Because the distribution in this case was of property and money, and not of stock or securities, § 115(h), as it existed at the time of this transaction, is inapplicable, and (considering the unambiguous language of § 27(f)) the policy disclosed by its subsequent amendment may not be read into it. P. 316 U. S. 112.

5. Treasury Regulations 94, Art. 27(f), held contrary to subsection (f) of § 27 of the Revenue Act of 1936, and an attempt to add a supplementary legislative provision, and therefore ineffective. P. 316 U. S. 113.

122 F.2d 361 affirmed.

Certiorari, 314 U.S. 604, to review the affirmance of a decision of the Board of Tax Appeals, 4 B.T.A. 1020, setting aside a determination of a deficiency in undistributed profits tax.

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