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FULMAN V. UNITED STATES, 434 U. S. 528 (1978)

U.S. Supreme Court

Fulman v. United States, 434 U.S. 528 (1978)

Fulman v. United States

No. 76-1137

Argued November 29, 1977

Decided February 22, 1978

434 U.S. 528


The provision of Treas.Reg. § 1.562-1(a) that a personal holding company's distribution of appreciated property to its shareholders results, under §§ 561 and 562 of the Internal Revenue Code of 1954, in a dividends-paid deduction limited to an amount that is the adjusted tax basis of the property in the hands of the company at the time of the distribution held valid as having a reasonable basis, as against the contention that such deduction should be equal in amount to the fair market value of the property distributed. Given the fact that § 27(d) of the Internal Revenue Code of 1939 expressly provided the "adjusted basis" measure for valuation of dividends paid in appreciated property, rather than money, and the ambiguity surrounding the legislative history of § 562 of the 1954 Code, which sets forth the rules applicable in determining dividends eligible for the dividends-paid deduction but contains no counterpart to § 27(d) of the 1939 Code, no "weighty reason" justifying setting aside the regulation in question can be identified. Pp. 434 U. S. 530-539.

545 F.2d 268, affirmed.

BRENNAN, J., delivered the opinion of the Court, in which BURGER, C.J., and STEWART, WHITE, MARSHALL, and REHNQUIST, JJ., joined. STEVENS, J., filed an opinion concurring in the judgment and concurring in part, post, p. 434 U. S. 539. POWELL, J., filed a dissenting opinion, post, p. 434 U. S. 539. BLACKMUN, J., took no part in the consideration or decision of the case.

Page 434 U. S. 529

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