Harlan F. Stone

“ The question to be decided is whether payments received by a corporation as a stockholder in another corporation, upon the latter's complete liquidation, are to be treated as payments upon a sale or exchange of the stock under § 23 (r) (1) of the Revenue Act of 1932, 47 Stat. 169, 183, 26 U.S.C.A. § 23, which allows the deduction of losses from sales or exchanges of stock, not held for more than two years, only to the extent of the gains from such sales or exchanges. ”

“ Congress, in enacting the 1934 Act, recognized that under that of 1932 '* * * a distribution in liquidation of a corporation is treated in the same manner as a sale of stock.' Report of Senate Committee on Finance, No. 558, 73rd Cong., 2nd Sess., p. 37. To prevent avoidance of surtax through liquidation of corporations with large surpluses, Congress found it necessary to place gains on liquidations on a different basis from gains on sales. ”

“ The scheme of the 1932 Act, as respects the treatment of gains and losses upon the sale or exchange of property on a different basis from other types of gain or loss, is substantially that of the 1928 Act, which we have considered in White v. United States, supra. ”