Griffiths v. Helvering
| Decision Date | 18 December 1939 |
| Docket Number | No. 49,49 |
| Citation | 60 S.Ct. 277,84 L.Ed. 319,308 U.S. 355 |
| Parties | GRIFFITHS v. HELVERING, Com'r of Internal Revenue |
| Court | U.S. Supreme Court |
Messrs. Herman A. Fischer and Delbert A. Clithero, both of Chicago, Ill., for petitioner.
Mr. Arnold Raum, Sp. Asst. to Atty. Gen., for respondent.
The case is here to review a decision of the Circuit Court of Appeals for the Seventh Circuit (103 F.2d 110) reversing an order of the Board of Tax Appeals (37 B.T.A. 314) which had overruled a deficiency assessment by the Commissioner of Internal Revenue in petitioner's income tax return for 1933. We granted certiorari, 308 U.S. 531, 60 S.Ct. 73, 84 L.Ed. —-, because of an alleged conflict between the decision below and that of the Circuit Court of Appeals for the Second Circuit in Smith v. Higgins, 102 F.2d 456; Id., 308 U.S. 536, 60 S.Ct. 88, 84 L.Ed. -.
The facts are undisputed, and, for purposes of our decision, may be thus abridged: In 1926 Griffiths, the petitioner, paid one Lay $100,000 for some stock. The investment was unprofitable, and the upshot of a complicated series of transactions was allowance to Griffiths by the Commissioner of a deductible loss of $92,500 for the year 1931 resulting from a sale of the stock by Griffiths to a family corporation. Thereafter, in 1932, Griffiths got wind of the fact that Lay had defrauded him in the 1926 sale. Negotiations were begun for a settlement of Griffiths' claim against Lay, and by January 1933, Griffiths' lawyer had devised an arrangement for such a settlement. The gist of the arrangement was this: Griffiths was to reacquire the shares, convey them to a corporation newly created for the purpose of furthering the scheme and wholly controlled by Griffiths, which in turn was to transfer the stock back to Lay for $100,000 to be paid by him, and that sum was to be paid over by the corporation to Griffiths in annual installments for forty years, with interest on the deferred payments.1 The essentials of this scheme were carried out. Its purpose—to disguise by intervening elaborations what in fact was a rescission of the original purchase by Griffiths for $100,000—was made more manifest by these facts: Griffiths personally re-acquired and transferred the shares to Lay without revealing the existence of the new corporation, gave Lay a personal release of all claims against him, and personally received from Lay the $100,000 which he then turned over to the corporation.
On these findings the Commissioner ruled that Griffiths, having been allowed a deduction for loss attributable to the stock purchased from Lay and having now recouped that loss through settlement of his claim against Lay, was subject to tax for the amount of the settlement in 1933. We think the Commissioner was right, and that the Circuit Court of Appeals properly reversed the Board of Tax Appeals.
The facts leave little scope for legal explication. Griffiths had a claim for fraud against Lay which, when satisfied, wiped out the loss for which he had received an earlier...
To continue reading
Request your trial
-
Kraft Foods Company v. Commissioner of Internal Rev.
...55 S.Ct. 266, 79 L.Ed. 596; Minnesota Tea Co. v. Helvering, 1938, 302 U.S. 609, 58 S.Ct. 393, 82 L.Ed. 474; Griffiths v. Helvering, 1939, 308 U.S. 355, 60 S.Ct. 277, 84 L.Ed. 319; Higgins v. Smith, 1941, 308 U.S. 473, 60 S.Ct. 355, 84 L.Ed. 406; Commissioner of Internal Revenue v. Court Hol......
-
United States v. Silk Harrison v. Greyvan Lines
...148 F.2d 51. See also note 2. 10 Gregory v. Helvering, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596, 97 A.L.R. 1355; Griffiths v. Helvering, 308 U.S. 355, 60 S.Ct. 277, 84 L.Ed. 319; Higgins v. Smith, 308 U.S. 473, 60 S.Ct. 355, 84 L.Ed. 406; Helvering v. Clifford, 309 U.S. 331, 60 S.Ct. 554, 8......
-
U.S. v. Ivic
...The Court has generally declined to adopt so simplistic an approach. As said by Justice Frankfurter in Griffiths v. Commissioner, 308 U.S. 355, 358, 60 S.Ct. 277, 278, 84 L.Ed. 319 (1939), "[l]egislative words are not inert, and derive vitality from the obvious purposes at which they are ai......
-
Melcher v. Commissioner
...v. United States 69-1 USTC s 9224, 407 F. 2d 404, 409-411; Gilbert v. Commissioner 57-2 USTC s 9929, 248 F. 2d 399; Griffiths v. Helvering 40-1 USTC s 9123, 308 U. S. 355; Higgins v. Smith 40-1 USTC s 9160, 308 U. S. 473; Bazley v. Commissioner 47-1 USTC s 9288, 331 U. S. 737; Diggs v. Comm......
-
The Economic Substance Doctrine: A U.S. Anti-Abuse Rule
...378 (1930); see also Commr. v. P. G. Lake, Inc., 356 U.S. 260 (1958); Helvering v. Clifford, 309 U.S. 331 (1940); Griffiths v. Commr., 308 U.S. 355 (1939); Sachs v. Commr., 277 F. 2d 879, 882-883 (8th Cir. 1960), affirming 32 T.C. 815 (1959)) A mere transfer in form, without substance, may ......
-
Installment Sales Revision Act of 1980
...entities" and the husband in fact had an independent purpose for the resale. Occasionally, the taxpayer lost. Griffiths v. Helvering, 308 U.S. 355 (1939) (assignment of income); Paul G. Justgarten, 71 T.C. 303 (1978) (constructive receipt); Phillip W. Wrenn, 67 T.C. 576 (1976) (tax avoidanc......
-
26 C.F.R. § 1.269-2 Purpose and Scope of Section 269
...Included in these cases are Gregory v. Helvering (1935) ( 293 U.S. 465; Ct. D. 911, C.B. XIV-1, 193); Griffiths v. Helvering (1939) ( 308 U.S. 355; Ct. D. 1431, C.B. 1940-1, 136); Higgins v. Smith (1940) ( 308 U.S. 473; Ct. D. 1434, C.B. 1940-1, 127); and J. D. & A. Spreckles Co. v. Commiss......