APPEAL OF QUIGLEY
| Decision Date | 25 June 1925 |
| Docket Number | Docket No. 891. |
| Citation | 2 BTA 159 |
| Parties | APPEAL OF S. B. QUIGLEY. |
| Court | U.S. Board of Tax Appeals |
William S. Pritchard, Esq., for the taxpayer.
Willis D. Nance, Esq., for the Commissioner.
Before SMITH, LITTLETON, and TRUSSELL.
This appeal is from a determination by the Commissioner of a deficiency in income tax for the calendar year 1919, in the amount of $1,683.80. The deficiency arises from the addition to the taxpayer's net income for the year 1919 of $21,047.48, alleged to have been received by him on December 27 of that year from the Quigley Motor Car Co., a corporation, as a liquidating dividend.
FINDINGS OF FACT.
The taxpayer, who is an individual residing at Mobile, Ala., was the owner of all of the capital stock of the Quigley Motor Car Co., a corporation organized and existing under the laws of the State of Alabama, which conducted an automobile sales agency and general garage business at Mobile, Ala. The capital stock of the corporation was of the par value of $2,000.
On December 21, 1919, the Quigley Motor Car Co. had assets in excess of $113,000, consisting of cash in the amount of about $13,700, accounts and notes receivable, new and used automobiles, tires, parts, automobile accessories, tools, and machinery. It had liabilities consisting of notes and accounts payable, notes discounted, trade acceptances and taxes due, of approximately $90,000, and capital stock of $2,000. Its books showed a surplus of $21,047.48, all of which appears to have been accumulated during the year 1919. On December 27, 1919, a certificate of dissolution of the corporation was voluntarily filed in the office of the probate judge of Mobile County, Ala. The business was thereupon taken over by the taxpayer and thereafter conducted as his individual business until the year 1922, when he discontinued the same. Upon the filing of the certificate of dissolution, the $21,047.48 surplus of the corporation was credited to the taxpayer's personal account, but no money or other asset was actually withdrawn by him from the business and no substantial part of the assets was converted into cash or its equivalent during the period December 27 to December 31, 1919, inclusive. In April, 1921, he drew $30,000 out of the business.
The Commissioner determined that the amount of $21,047.48 credited to the taxpayer's personal account upon the dissolution of the Quigley Motor Car Co. was a liquidating dividend under section 201 (c) of the Revenue Act of 1918, and taxable as income to him in the year 1919.
DECISION.
The determination of the Commissioner is approved.
The only question presented by the record in this appeal is whether or not the amount of $21,047.48 credited to the taxpayer upon the dissolution of the Quigley Motor Car Co. was a liquidating dividend to him and hence taxable as income. The Commissioner contends that the amount in question is taxable as income to the taxpayer under section 201 (c) of the Revenue Act of 1918, which provides that —
* * * Amounts distributed in the liquidation of a corporation shall be treated as payments in exchange for stock or shares, and any gain or profit realized thereby shall be taxed to the distribute as other gains or profits.
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