Opinion ID: 471026
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: 3 Petitioners were shareholders of Dunmovin Corporation, a personal holding company. In 1978, Dunmovin was completely liquidated pursuant to Internal Revenue Code Sec. 333. As a part of the liquidation, Mrs. Knowlton, who owned 975 shares of Dunmovin non-voting stock, received marketable securities including 24,950 shares of General Motors stock. Appellants filed a joint tax return for 1978 in which they reported net long-term capital gain of $124,396. In computing their capital gain on the distribution from Dunmovin, they excluded the value of the stock, relying on their contention that within the terms of IRC Sec. 333(e)(2) the stock had been acquired by Dunmovin prior to January 1, 1954. 1 It is not necessary for us to discuss the other factors that are to be considered in applying Section 333(e)(2), for the parties agree that the taxability of a gain on the acquisition of this stock is dependent on when it was acquired by Dunmovin, the liquidated personal holding company. 4 The Commissioner determined that the GM stock had been acquired by Dunmovin after December 31, 1953 and that under Section 333(e)(2), appellants should have included an additional $1,500,118.75 as capital gain resulting from the distribution of the GM stock. 5 A separate question is raised because during 1978, appellants apparently sold certain shares of GM stock. They argue that these were shares received in the Dunmovin distribution, and that had they treated the shares as having been acquired by Dunmovin after 1954, they would have had a higher basis in the stock and therefore less of a capital gains tax on the sale of them. This issue was raised by taxpayers in opposition to the Commissioner's Entry of Decision under Tax Court Rule 155.