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This Court and others have acknowledged this broader principle of
what Court Holding and Cumberland Pub. Serv. stand for.19 Where
shareholders are found to have negotiated the sale of corporate assets
independently, on their own behalf, the form of the transaction is
respected, and the corporation is not recast as the seller,
notwithstanding that some negotiations were carried on by the
shareholders before the liquidation. See, e.g., Bolker v.
Commissioner, 81 T.C. 782 (1983), affd. 760 F.2d 1039 (9th Cir. 1985);
Doyle Hosiery Corp. v. Commissioner, 17 T.C. 641 (1951); Amos L. Beaty
& Co. v. Commissioner, 14 T.C. 52 (1950).20 Where a corporation is
found to have negotiated a transaction, and at the last minute, the
shareholders are substituted for the corporation as sellers, Court
Holding has been applied to regard the corporation as the seller for
Federal income tax purposes. See, e.g., Waltham Netoco Theatres, Inc.
v. Commissioner, 401 F.2d 333 (1st Cir. 1968), affg. 49 T.C. 399, 405
(1968); Kaufmann v. Commissioner, 175 F.2d 28 (3d Cir. 1949), affg. 11
19 The Supreme Court noted in Central Tablet Manufacturing
Co. v. United States, 417 U.S. 673, 680 (1974), that its earlier
decisions in Court Holding and United States v. Cumberland Pub.
Serv. Co., 338 U.S. 451, 455 (1950), "created a situation where
the tax consequences were dependent upon the resolution of often
indistinct facts as to whether the negotiations leading to the
sale had been conducted by the corporation or by the
shareholders." See also Bolker v. Commissioner, 81 T.C. 782, 799
(1983), affd. 760 F.2d 1039 (9th Cir. 1985).
20 There is some discussion in the above-cited cases
concerning whether shareholders who are corporate officers or
directors can negotiate a sale of assets in corporate solution
on their own behalf, rather than on the corporation's behalf,
especially when the negotiations take place before the
corporation resolves to liquidate the assets that are to be sold.
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