Cullinan v. Walker,
262 U.S. 134 (1923)

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U.S. Supreme Court

Cullinan v. Walker, 262 U.S. 134 (1923)

Cullinan v. Walker

No. 301

Argued March 9, 1923

Decided April 30, 1923

262 U.S. 134


1. The gain accruing to a shareholder through enhancement of the value of his shares, and which, when segregated, becomes legally income subject to the income tax, may be segregated by a dividend made on liquidation of the corporation as well as by an ordinary dividend. P. 262 U. S. 137.

2. Partly to comply with its state law and partly to procure additional credit for the business, an oil corporation was dissolved; its trustees in liquidation formed a producing corporation and a pipeline corporation, in the same state, transferred one-half of the assets to each, receiving from each in return its stock and its bonds, transferred all this stock to a holding corporation, which they formed in another state, receiving in exchange its stock, and distributed this stock, with the bonds of the other two existing corporations, among the persons who had been the stockholders of the dissolved concern. The three new corporations had, at the time of the distribution, no assets other than those so received from the trustees, and the value of the assets was the same as when the trustees held them. Held, that the securities thus distributed were not in legal effect a stock dividend, and that a distributee was taxable under the income tax provision of September 8, 1916, c. 463, Tit. I, §§ 1 and 2, 39 Stat. 756, upon the amount by which the securities he received exceeded in value his investment in the shares of the original corporation. P. 262 U. S. 136. United States v. Phellis, 257 U. S. 156.


Error to a judgment of the district court in an action against an internal revenue collector to recover back a tax paid under protest.

Page 262 U. S. 135

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