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United States v. Cumberland Pub. Svc. Co., 338 U.S. 451 (1950)

United States v. Cumberland Pub. Svc. Co.

No. 214

Argued December 12, 1949

Decided January 9, 1950

338 U.S. 451


A closely held corporation made to its shareholders a distribution of assets in kind and was dissolved. The stockholders transferred the property to a purchaser. In an action by the corporation for refund of a capital gains tax on the sale, the Court of Claims found, upon proper supporting evidence, that the sale was made by the shareholders, rather than by the corporation, and entered judgment for the corporation.

Held: the record does not require a finding that the sale was made by the corporation, rather than by the shareholders, and the judgment of the Court of Claims is affirmed. Commissioner v. Court Holding Co., 324 U. S. 331, distinguished. Pp. 338 U. S. 452-456.

(a) A corporation may liquidate or dissolve without subjecting itself to the corporate gains tax, even though a primary motive is to avoid the burden of corporate taxation. P. 338 U. S. 455.

(b) In this case, it was for the Court of Claims (the trial court), upon consideration of the entire transaction, to determine the factual category in which the transaction belonged. P. 338 U. S. 456.

113 Ct.Cl. 460, 83 F.Supp. 843, affirmed.

In an action for refund of a federal tax, the Court of Claims gave judgment for the plaintiff. 113 Ct.Cl. 460, 83 F.Supp. 843. This Court granted certiorari. 338 U.S. 846. Affirmed, p. 338 U. S. 456.

Page 338 U. S. 452

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