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Arrowsmith v. Commissioner, 344 U.S. 6 (1952)
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General SummaryThis case is from a collection containing the full text of over 16,000 Supreme Court cases from 1793 to the present. The body of Supreme Court decisions are, effectively, the final interpretation of the Constitution. Only an amendment to the Constitution can permanently overturn an interpretation and this has happened only four times in American history.
Arrowsmith v. Commissioner, 344 U.S. 6 (1952)
Arrowsmith v. Commissioner of Internal Revenue No. 51 Argued October 24, 1952 Decided November 10, 1952 344 U.S. 6
CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
Syllabus
In 1937, two taxpayers decided to liquidate and divide the proceeds of a corporation in which each owned 50% of the stock. Partial distributions were made in 1937, 1938, and 1939, and a final one in 1940, and the profits thereon were reported by the taxpayers in their income tax returns as "capital gains." In 1944, a judgment was rendered against the corporation and against one of the taxpayers individually. Each of the two taxpayers paid half of this judgment and deducted 100% of the amount so paid as an ordinary business loss in his income tax return for 1944.
Held: Under §§ 23(g) and 115(c) of the Internal Revenue Code, these losses should have been treated as "capital losses," since they were paid because of liability imposed on the taxpayers as transferees of liquidation distribution assets. Pp. 7-9.
(a) A different result is not required because of the principle that each taxable year is a separate unit for tax accounting purposes. Pp. 8-9.
(b) Nor is a different result required as to one of the taxpayers because the judgment was against him personally, as well as against the corporation. P. 9.
193 F.2d 734, affirmed.
The Commissioner of Internal Revenue determined that a judgment loss paid by petitioners as transferees of liquidation assets of a corporation were "capital losses" under the Internal Revenue Code. The Tax Court held that they were ordinary business losses. 15 T.C. 876. The Court of Appeals reversed. 193 F.2d 734. This Court granted certiorari. 343 U.S. 976. Affirmed, p. 9.
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Chicago: U.S. Supreme Court, "Syllabus," Arrowsmith v. Commissioner, 344 U.S. 6 (1952) in 344 U.S. 6 344 U.S. 7. Original Sources, accessed November 22, 2024, http://originalsources.com/Document.aspx?DocID=38JRRHZPVW5CVJK.
MLA: U.S. Supreme Court. "Syllabus." Arrowsmith v. Commissioner, 344 U.S. 6 (1952), in 344 U.S. 6, page 344 U.S. 7. Original Sources. 22 Nov. 2024. http://originalsources.com/Document.aspx?DocID=38JRRHZPVW5CVJK.
Harvard: U.S. Supreme Court, 'Syllabus' in Arrowsmith v. Commissioner, 344 U.S. 6 (1952). cited in 1952, 344 U.S. 6, pp.344 U.S. 7. Original Sources, retrieved 22 November 2024, from http://originalsources.com/Document.aspx?DocID=38JRRHZPVW5CVJK.
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