GREGORY v. HELVERING, COMMISSIONER OF INTERNAL REVENUE, 293 U.S. 465

Summary

The stockholder organized a new corporation, transferred 1000 shares of stock to the new corporation. No other business was ever transacted by the new corporation. She then dissolved the new corporation and distributed all its assets, namely the shares, to herself. She immediately sold the shares and claimed a sum for taxation as capital net gain. The Commissioner determined that it should have been treated as a dividend. The Court affirmed a reversal of a decision setting aside an order of the Commissioner, who had determined a deficiency in income tax against the stockholder, finding no corporate reorganization had occurred. The Court found that the transaction that had occurred was not the kind intended under § 112 of the Revenue Act of 1928, 45 Stat. 791, 818. When § 112(B) spoke of a transfer of assets by one corporation to another, it meant a transfer made in pursuance of a plan of reorganization of corporate business and not a transfer of assets by one corporation to another in ...