Court Opinion

ID: 4496203
Source: CourtListenerOpinion
Date Created: 2020-01-23 18:14:44.003153+00
Date Added: 2024-06-11T14:54:13.784507
License: Public Domain

Mellott,
dissenting: The “primary purpose” of the formation of the syndicate was “buying and selling shares of the Common Capital stock of The Coca-Cola Company.” (Art. 1, syndicate agreement.) “The parties joined in a common enterprise for the transaction of business, and the beneficiaries [subscribers] who contributed money for that purpose became associated in the enterprise according to the terms of the arrangement” just as the beneficiaries did in Helvering v. Combs, 296 U. S. 365, from which the quotation is taken. This resulted in considerable profit, the tax upon which, as determined by the respondent, amounted to $79,817.41.
The majority cite several cases in which the courts or this Board have held that there was not a sufficient resemblance between a true corporation and the entity there under consideration to justify taxing it as a corporation. Most of the cited cases were promulgated prior to December 16, 1935, on which date the Supreme Court decided Morrissey v. Commissioner, 296 U. S. 344; Swanson v. Commissioner, 296 U. S. 362; Helvering v. Combs, supra; and Commissioner v. Coleman-Gilbert Associates, 296 U. S. 369.
Darol Trading Account, 34 B. T. A. 837, is'distinguishable from the case at bar; for as pointed out in the opinion “by no stretch of the imagination could it be said that” the petitioner was carrying-on a business enterprise. But I am unable to make any such distinction between the case at bar and Vernon J. Bert, Trustee, 34 B. T. A. 805.
* Section 701 of the Revenue Act of 1928 provides that the term “corporation” includes associations. The Supreme Court in Morrissey v. Commissioner, supra, says: “The inclusion of associations with corporations implies resemblance; but it is resemblance and not identity. * * * While the use of corporate forms may furnish persuasive evidence of the existence of an association, the absence of particular forms, or of the usual terminology of corporations, cannot be regarded as decisive.” Elsewhere in the opinion it is pointed out that “association” implies associates and the entering into a joint enterprise for the transaction of business. If these things are present, as they are in the case at bar, we have “the distinctive features” of the creation of an entity “created to enable the participants to carry on a business and divide the gains which accrue from their common undertaking.” I am of the opinion that the respondent did not err in taxing petitioner as a corporation.
Black, Smith, TuRNek, and ARNOLD agree with this dissent.