319 U.S. 436 (1943), 660, Moline Properties, Inc. v. Commissioner of Internal Revenue

Docket Nº:No. 660
Citation:319 U.S. 436, 63 S.Ct. 1132, 87 L.Ed. 1499
Party Name:Moline Properties, Inc. v. Commissioner of Internal Revenue
Case Date:June 01, 1943
Court:United States Supreme Court

Page 436

319 U.S. 436 (1943)

63 S.Ct. 1132, 87 L.Ed. 1499

Moline Properties, Inc.


Commissioner of Internal Revenue

No. 660

United States Supreme Court

June 1, 1943

Argued April 16, 19, 1943




1. Upon the facts of this case, held that, for the purpose of the federal income tax, gain from sales (in 1935 and 1936) by a corporation of its property, although the corporation was owned wholly by an individual stockholder, could not be treated as income taxable to the individual, rather than to the corporation. P. 440.

2. The corporation in this case was not a mere agent of the stockholder. P. 440.

131 F.2d 388, affirmed.

Certiorari, 318 U.S. 751, to review the reversal of a decision of the Board of Tax Appeals, 45 B.T.A. 647, that there were no deficiencies in the corporate taxpayer's income and excess profits taxes.

REED, J., lead opinion

MR. JUSTICE REED delivered the opinion of the Court.

Petitioner seeks to have the gain on sales of its real property treated as the gain of its sole stockholder and its corporate existence ignored as merely fictitious. Certiorari was granted because of the volume of similar litigation in the lower courts and because of alleged conflict

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of the decision below with other circuit court decisions.1 318 U.S. 751.

Petitioner was organized by Uly O. Thompson in 1928 to be used as a security device in connection with certain Florida realty owned by him. The mortgagee of the property suggested the arrangement, under which Mr. Thompson conveyed the property to petitioner, which assumed the outstanding mortgages on the property, receiving in return all but the qualifying shares of stock, which he in turn transferred to a voting trustee appointed by the creditor. The stock was to be held as security for an additional loan to Mr. Thompson to be used to pay back taxes on the property. Thompson owned other real property, title to which he held individually. In 1933, the loan which occasioned the creation of petitioner was repaid, and the mortgages were refinanced with a different mortgagee; control of petitioner reverted to Mr. Thompson. The new mortgage debt was paid in 1936 by means of a sale of a portion of the property held by petitioner. The remaining holdings of the petitioner were sold in three parcels, one each in 1934, 1935, and 1936, the proceeds being received by Mr. Thompson and deposited in his bank account.

Until 1933, the business done by the corporation consisted of the assumption of a certain obligation of Thompson to the original creditor, the defense of certain condemnation proceedings, and the institution of a suit to remove...

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