General Utilities & Operating Co. v. Helvering, 296 U.S. 200 (1935)

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General Utilities & Operating Co. v. Helvering

No. 41

Argued November 15, 1935
Decided December 9, 1935
296 U.S. 200

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE FOURTH CIRCUIT

Syllabus

1. When a corporation, owning shares in another company which have increased in value since it bought them, declares a dividend payable in such shares out of the surplus arising from such increase, and pays it accordingly by distributing such shares in specie among its stockholders, no taxable gain results to the corporation. This is not a sale to stockholders, nor a use of assets to discharge indebtedness. Pp. 202, 206.

2. In reviewing a decision of the Board of Tax Appeals, the Circuit Court of Appeals may not sustain an assessment over the Board’s decision upon a ground which was not presented to the Board nor in the petition for review; the taxpayer is entitled to know with fair certainty the basis of the claim against him. P. 206.

3. The Circuit Court of Appeals committed error in this case not only in deciding a question not properly raised, but also in making an inference of fact in conflict with the stipulation of the parties and the findings of the Board of Tax Appeals and without support in the record. P. 206.

4. Upon reversal of judgment of the Circuit Court of Appeals overruling a decision of the Board of Tax Appeals, the cause will not be remanded to the Board for further findings if it be apparent that nothing could properly be found to sustain the Commissioner’s contention. P. 207.

74 F.2d 972 reversed.

Certiorari, 295 U.S. 730, to review a judgment which reversed a decision of the Board of Tax Appeals overruling an income tax assessment.