General Utilities & Operating Co. v. Helvering
United States Supreme Court
296 U.S. 200 (1935)
General Utilities & Operating Company (General Utilities) (plaintiff) paid $2,000 for 20,000 shares of stock in Islands Edison Company. By the following year, those shares were valued at $1 million. Another company, Southern Cities Utilities Company, sought to acquire all Islands Edison stock. The president of that company met with the president of General Utilities and agreed that General Utilities would avoid making an outright sale of all its 2,000 shares, which would be a taxable event. Instead, General Utilities declared a dividend and distributed 19,090 of the shares to its 33 shareholders, who then conveyed them to Southern Cities Utilities. General Utilities sold the remaining 910 shares to Southern Cities Utilities, reporting a profit only on those shares. Commissioner of Internal Revenue Guy Helvering (defendant) assessed a deficiency, finding General Utilities also liable for the much larger profit made on the 19,090 shares. General Utilities sought a redetermination from the Board of Tax Appeals, which found that the dividend distribution was not a taxable event. Helvering appealed. The United States Court of Appeals for the Sixth Circuit reversed, holding that General Utilities and Southern Cities Utilities had devised an obvious scheme to evade tax liability. General Utilities appealed. The United States Supreme Court granted certiorari.
Rule of Law
Holding and Reasoning (McReynolds, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 684,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 684,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 42,800 briefs, keyed to 988 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.