National Grocery Co. v. Commissioner of Internal Revenue

The case is here on petition to review a decision of the Board of Tax Appeals.

The sole question presented is one of fact —whether the liquidation of a subsidiary of appellant occurred in 1933, as appellant contends, or in 1934 as determined by the Commissioner and as found by the Board. If the subsidiary was liquidated in the former year the gain realized therefrom is not taxable, § 141 of the Revenue Act of 1932 ( 47 Stat. 169 , 213, 26 U.S.C.A.Int.Rev. Acts, page 532), Art. 37 of Regulations 78. If, on the other hand, the liquidation took place in 1934, the resulting gain is taxable under § 115(c) of the Revenue Act of 1934 ( 48 Stat. 680 , 711).

Appellant is a Washington corporation engaged in the wholesale grocery business. It owned the major portion of the stock of the Northern Grocery Company, a Washington corporation having its place of business at Bellingham in that state. Employees of the latter corporation held the balance — 37%—of its shares. In the spring of 1933 appellant and the other shareholders of the Northern informally agreed upon a plan of consolidation. The program involved the acquisition by appellant, in exchange for its own stock, of the shares in the…