Horschel

The sole question presented on this appeal is whether part of the distribution of assets made by a corporation upon its liquidation constituted an assignment of anticipated income taxable to it.

The Selah State Bank conducted banking operations in Selah, Washington, and in 1920 the shareholders of the bank organized the Selah Securities Company as an adjunct to the banking business, primarily for the purpose of acquiring and holding certain types of collateral security which could not be held by the bank. The 300 shares of capital stock were held by the same persons who held the stock of the bank, and in the same proportions. The Selah Securities Company (hereinafter referred to as the corporation) kept its books and reported its income on a calendar year and a cash basis. The Commissioner has never, and does not now contest this method.

Upon the advice of the corporation’s accountant that the advantages of continued existence were outweighed by the disadvantages from a tax vista, a special meeting of the shareholders was called on December 28, 1943, at which time a resolution was adopted providing for liquidation, and Elmer Dahlin was appointed trustee for the purpose of…