- 38 -
assets in the taxpayer’s hands and the taxpayer’s sale of those
assets resulted in a capital loss. Id. at 386.
Both the result in Acro Manufacturing Co. v. Commissioner,
supra, and our reasoning in reaching that result were affirmed by
the Court of Appeals for the Sixth Circuit. Acro Manufacturing
Co. v. Commissioner, 334 F.2d 40 (6th Cir. 1964). In affirming
our decision that the taxpayer’s “minimal, transitory” period of
actual ownership of assets whose character was non-capital in
Button’s hands was insufficient to establish their character as
non-capital assets in the taxpayer’s hands, the Court of Appeals
observed that it was “not advised of any showing by the
taxpayer’s corporate records” that the taxpayer did, in fact,
operate the button business for any period of time. Id. at 44.15
While the facts of Acro Manufacturing Co. v. Commissioner,
39 T.C. 377 (1962), involve an actual, rather than a deemed,
section 332 liquidation, we do not believe that that is a
consequential difference. Because the period between the deemed
distribution in liquidation of H&C’s assets and the deemed sale
of those assets can be described as a “minimal, transitory
15 Respondent points out that Dover UK failed to report any
income from H&C’s business on its 1997 return filed with the
United Kingdom Inland Revenue. While we deem that fact
irrelevant, we note that Dover UK’s United Kingdom tax reporting
position is justified by the fact that H&C’s disregarded entity
election resulted in a deemed liquidation of H&C effective for
United States, but not United Kingdom, tax purposes.
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