Legal Document

350 U.S. 55 76 Supreme Court Reporter 25 100 L.Ed. 43 UNITED STATES of America, Petitioner,v.ANDERSON, CLAYTON & CO. Number 26. Argued Oct. 20, 1955. Decided Nov. 7, Mr. or Haw. Hawai‘i Reports KFH45 A2 Brian Holland, Asst. Atty. Gen., for petitioner. John C. White, Washington, D.C., respondent. Justice MINTON delivered the opinion Court. 1 Anderson, Clayton Co., a Delaware corporation, was organized in 1929. Its capital structure consisted preferred stock and 100,000 shares common stock, value which fixed at one dollar per share. By April 21, 1930, all had been issued, varying amounts, to corporation's managing officials, consideration their worth responsibility company, is engaged highly technical skilled business cotton merchandising. 2 In 1931 written agreement entered into between corporation stockholders, purpose restrict ownership management group adjust respective interests among that as changed. Accordingly, provided could not be disposed except by consent owners 75% stock. Upon death any party agreement, agreed purchase deceased its book July 31 preceding stockholder's death. 3 One M. D. chief officers originally issued 31,000 shares. During development Anderson transferred his pursuant junior officials they assumed more duties responsibilities, until time 1939 he owned 18,574 These purchased $50.79 This retired, but retained treasury While treasury, it voted nor were dividends paid on it. 4 The company 1944 sold 6,500 these then $112.68 difference price Anderson's estate received from sale $402,285, United States imposed long-term capital-gains tax $100,571.25. Respondent sued Claims recover amount. respondent took position no gain resulted because dealing 'as might another corporation,' contemplated Treasury Regulations 111, § 29.22(a)—15.1 Claims, 122 F.Supp. 837, 129 Ct.Cl. 295, with judgment recovery paid, interest. We granted certiorari, 348 936, 75 356, claim conflict decisions Courts Appeals.2 5 sole question therefore whether, circumstances this case, 29.22(a)—15 makes taxable transaction under 22(a) Internal Revenue Code 1939, 26 Annotated KF65 U5 22(a).3 6 Article 66 74, promulgated Act 1928, purchases own holds later sells 'realizes loss' such transactions. upheld regulation proper interpretive general terms Code. Helvering versus R. Judge Reynolds Tobacco 306 110, 114, 59 423, 425, 83 536. present 1934. effect remove categorical exclusion gains losses arising out accorded transactions 74. amended specifically excludes consequences upon original issue whether less than par stated value. On other hand, provides flow receipt sales property satisfaction indebtedness With regard dealings result depends generally 'real nature transaction, ascertained facts circumstances.' further 'if deals are considered, purposes, though fact Thus, here depends, final analysis, dealt might' have 7 ruled, after thorough examination surrounding corporation. conclusion abundantly supported subsidiary findings, evidence case. 8 agree Claims. Here made contract without shown advantageous investment. Instead found maintain distribution responsible active members organization manner designed reflect Indicative singleness some executives below acquired. No given opportune sale. dictated fortuitous circumstance Moreover, when purchased, lodged treasury. It taken account payment dividends, shareholder meetings, counted establishing quorum. unrecognized rights incident corporations. thus clear others. 9 Government urges crucial inquiry answer reacquired resold retired new issued; since resale greater cost results applicable regulation. receives comfort language C.I.R. Batten, Barton, Durstine Osborn, Inc., Cir., 171 Federal Reporter, 2nd Series 474, 476, Landers Corp., 210 188, 191. But we do think formalities should raised an important position. depend 'the real circumstances,' retired. When viewed entirety, instant limited wholly intracorporate element speculation envisioned shares, does constitute deal within meaning 10 affirmed. 11 Affirmed. 12 DOUGLAS BURTON dissent. 'Sec. 29.22(a)—15. Acquisition Disposition Corporation Own Capital Stock. (a) Whether acquisition disposition gives rise deductible loss circumstances. subscription issuance neither loss, excess of, than, '(b) if resulting computed same another. So also stocks it, property. Any derived subject tax, sustained allowable deduction where permitted provisions Code.' W. Porter 187 939; Rollins Burdick Hunter 174 698; 474. '§ 22. Gross income '(a) General definition. 'Gross income' includes gains, profits, salaries, wages, compensation personal service (including officer employee State, political subdivision thereof, agency instrumentality foregoing), whatever kind form professions, vocations, trades, businesses, commerce, sales, property, growing use interest property; interest, rent, securities, carried profit, profits source whatever. * *' For years 1953, involved carry virtue congressional enactment 1032 1954, 1032, provides: 'No shall recognized money exchange stock) corporation.'

Classification Label: 11