Seattle Renton Lumber Co. v. United States

This appeal is from an adverse judgment in a suit to recover income and excess profits taxes paid under protest. The question for determination is whether the taxpayer- — appellant-—received income from the operation of a lumber mill subsequent to June 30, 1933, at which time it undertook to dispose of all its operating property to its stockholders.

The taxpayer was incorporated in 1929 under the Washington laws, after which it built a sawmill and was continuously engaged in the manufacture and sale of lumber until the end of June 1933. It had outstanding 900 shares of stock, all held by a small and closely integrated group of people. The chief stockholders, who were also the corporate trustees, were Roberts, Weter, and Carlson, these owning a total of about 680 shares. Roberts and Weter were partners in a Seattle law firm. Carlson was manager of the mill and a long-time associate of Roberts. The remaining stock was owned in small blocks by ten individuals, all of whom were members of Roberts’ immediate family or were related to him by marriage. 1 Beginning with the spring of 1933 Roberts discussed with the shareholders, singly and in groups, the matter of discontinuing the…