UNITED STATES SUPREME COURT DECISIONS ON-LINE

1. A corporation wholly owned by a taxpayer transferred 1000 shares of stock in another corporation held by it among its assets to a new corporation, which thereupon issued all of its shares to the clubjuris

Page 293 U. S. 466

taxpayer. Within a few days, the new corporation was dissolved and was liquidated by the distribution of the 1000 shares to the taxpayer, who immediately sold them for her individual profit. No other business was transacted, or intended to be transacted, by the new corporation. The whole plan was designed to conform to § 112 of the Revenue Act of 1928 as a "reorganization," but for the sole purpose of transferring the shares in question to the taxpayer, with a resulting tax liability less than that which would have ensued from a direct transfer by way of dividend. Held: while the plan conformed to the terms of the statute, there was no reorganization within the intent of the statute. P. 293 U. S. 468.

2. By means which the law permits, a taxpayer has the right to decrease the amount of what otherwise would be his taxes, or altogether to avoid them. P. 293 U. S. 469.

3. The rule which excludes from consideration the motive of tax avoidance is not pertinent to the situation here, because the transaction upon its face lies outside the plain intent of the statute. P. 293 U. S. 470.

69 F.2d 809 affirmed.

Certiorari to review a judgment reversing a decision of the Board of Tax Appeals, 27 B.T.A. 223, which set aside an order of the Commissioner determining a deficiency in income tax. clubjuris

Page 293 U. S. 467