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then dissolved Averill. The taxpayer ultimately received the
Monitor shares from Averill in a liquidating distribution.
Upon review of the matter, the Supreme Court sustained the
Commissioner's determination that the purported reorganization
was a sham. The Supreme Court concluded that the transaction was
carried out in contravention of the plain intent of the
controlling statute, reasoning in pertinent part as follows:
Putting aside, then, the question of motive in respect
of taxation altogether, and fixing the character of the
proceeding by what actually occurred, what do we find?
Simply an operation having no business or corporate
purpose--a mere device which put on the form of a
corporate reorganization as a disguise for concealing
its real character, and the sole object and
accomplishment of which was the consummation of a
preconceived plan, not to reorganize a business or any
part of a business, but to transfer a parcel of
corporate shares to the petitioner. No doubt, a new
and valid corporation was created. But that
corporation was nothing more than a contrivance to the
end last described. It was brought into existence for
no other purpose; it performed, as it was intended from
the beginning it should perform, no other function.
[Gregory v. Helvering, supra at 469.]
In sum, Gregory v. Helvering, supra, stands for the
principle that, although a business transaction may be structured
in strict compliance with all pertinent statutory requirements, a
court charged with reviewing the transaction is not obliged to
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