287 U.S. 415 (1932), 95, Burnet v. Commonwealth Improvement Co.

Docket Nº:No. 95
Citation:287 U.S. 415, 53 S.Ct. 198, 77 L.Ed. 399
Party Name:Burnet v. Commonwealth Improvement Co.
Case Date:December 12, 1932
Court:United States Supreme Court

Page 415

287 U.S. 415 (1932)

53 S.Ct. 198, 77 L.Ed. 399



Commonwealth Improvement Co.

No. 95

United States Supreme Court

Dec. 12, 1932

Argued November 14, 1932




1. The Court does not undertake to determine points not raised or considered below. P. 418.

2. The taxpayer, a corporation wholly owned by the estate of a decedent who had set it up and transferred securities to it as a medium for avoiding multiple death duties and insuring the safety of a charitable endowment, was assessed a deficiency in its return for 1920 on account of a gain arising out of an exchange of securities between it and the estate. It contended that there could be no true gain or loss in transactions between it and the estate because they were the same entity. Held: the record fails to disclose circumstances sufficient to require disregard of the corporate form. P. 419.

57 F.2d 47 reversed.

Page 416

Certiorari, 286 U.S. 541, to review a judgment reversing a decision of the Board of Tax Appeals, 20 B.T.A. 1189, determining a deficiency in income taxes. Cf. the two cases next preceding.

MCREYNOLDS, J., lead opinion

MR. JUSTICE McREYNOLDS, delivered the opinion of the Court.

Respondent, Commonwealth Improvement Company, all of whose shares are owned by the estate of P. A. B. Widener (he died in 1915), made return concerning income and excess profits taxes for 1920 wherein it claimed deduction for loss occasioned by transfer of British-American Tobacco Company stock to the estate. The Commissioner refused to allow the deduction, and found that, rightly regarded, the transaction had yielded gain to the taxpayer. A deficiency assessment followed.

The Board of Tax Appeals approved the Commissioner's action, but the Circuit Court of Appeals, Third Circuit (57 F.2d 47), held otherwise.

Having acquired control of the Commonwealth Improvement Company, incorporated under an old Pennsylvania charter, Mr. Widener caused an increase of its capital stock and authorization of $20,000,000 script and debentures. He then, May 1, 1912, conveyed to the corporation sundry stocks valued at $25,000,000, taking in payment all its shares and $20,000,000 in debentures and script. He was old, and the double purpose was to avoid multifold death duties or transfer taxes and to...

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