Marr v. United States

268 U.S. 536 (1925)

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Marr v. United States

United States Supreme Court
268 U.S. 536 (1925)

Facts

Marr and his wife (plaintiffs) owned 339 shares of preferred stock and 425 shares of common stock of General Motors Company of New Jersey (old corporation), which underwent a reorganization. A new corporation, General Motors Corporation of Delaware (new corporation), was created, and shareholders of the old corporation exchanged their shares for shares of the new corporation. The new corporation took over the assets and business of the old corporation, and the transfer included the earnings of the old corporation. Marr and his wife received 7 percent preferred voting stock of the new corporation in exchange for 6 percent nonvoting preferred stock of the old corporation. Additionally, the Marrs received five shares of the new corporation for every share of the old corporation. In total, the Marrs’ new shares were worth $324,466.57 more than their old shares; this gain was assessed as income by the United States Treasury Department (defendant). The Marrs filed for a refund, which was denied. The Marrs appealed to the United States Court of Claims, which ruled in favor of the United States. The Marrs then appealed to the United States Supreme Court.

Rule of Law

Issue

Holding and Reasoning (Brandeis, J.)

Dissent (Van Devanter, J.)

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