Keck v. Commissioner

415 F.2d 531 (1969)

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Keck v. Commissioner

United States Court of Appeals for the Sixth Circuit
415 F.2d 531 (1969)

JC

Facts

Arthur Shaw owned stock in three corporations in 1956 and entered into an agreement for the sale of assets of the corporation at that time. A condition precedent to that sale was the approval of the Interstate Commerce Commission. Shaw died on November 27, 1958. On May 5, 1960, the Interstate Commerce Commission approved the sale. In July 1960, the three corporations owned by Shaw were liquidated, and the cash received was distributed in exchange for, and in cancellation of, stock of the shares of the companies. Mary Ann Keck (plaintiff), the widow of Arthur Shaw, was paid $314,328.53 in exchange for 100 shares of one of the liquidated companies. Keck reported the distribution of stock at its liquidation sale price, which she also listed as its base, and thus Keck indicated no taxable income. The Commissioner of Internal Revenue (defendant) disagreed, positing that the amounts received were income in respect of a decedent and were taxable to Keck. The tax court agreed with the government, finding that all significant economic activity in connection with the sale of assets had been accomplished prior to Shaw’s death. However, a dissenting minority of the tax court agreed with Keck, noting that regardless of the economic activity involved, at the time of Shaw’s death, he was not entitled to the funds in question, as the sale was still subject to contingencies, including the approval of the Interstate Commerce Commission. Keck appealed the tax court’s ruling.

Rule of Law

Issue

Holding and Reasoning (McAllister, J.)

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