The opinion
DisNEy, J., dissenting: I shall not dwell upon the question as to whether it is important that the earlier agreements had to do with sale of the property, whereas the stock was finally purchased. In either event, in my opinion, the sale finally made was made by the corporation, the Development Co., and the majority wrongly concludes that there was no taxable gain. This to me appears clear for the following reasons: We have heretofore, in Taylor Oil & Gas Co., 15 B. T. A. 609, and in Fred A. Hellebush, 24 B. T. A. 660, twice concluded that a sale of property by the directors as trustee for a corporation in dissolution was a sale for the corporation and not the stockholders. Both cases were affirmed. In the Taylor case the resolution to dissolve was passed on January 16, 1920. It recited that the corporate existence “is hereby finally and forever dissolved.” On the same date the stockholders resolved that the board of directors should act as liquidating trustees for its creditors and stockholders, and that they might, in the name of the corporation, sell the property. On January 20 the corporation was dissolved by filing papers with the secretary of state. On January 26 the directors, as trustees for stockholders and creditors, transferred the property. Thus it appears that the dissolution, both by resolution and by form of law, preceded the sale by the trustees for the corporation. In the Hellebush case the stockholders on April 20, 1927, resolved to dissolve and liquidate, and to transfer the property to the president and secretary-treasurer of the corporation as trustees with power to liquidate the assets and to sell the property and distribute to the stockholders. The same day the corporate officers delivered a bill of sale to the trustees for the personal property and did the same as to the real estate about the same day. The trustees then made ah agreement, on April 20, 1927, to sell the property and conveyed the personal property on that date, and on May 14 conveyed the real estate. Dissolution under the law of Ohio took place on June 2, 1927. The trustees received about $270,000 and distributed the net returns to the stockholders. Quoting Taylor Oil & Gas Co. v. Commissioner, 47 Fed. (2d) 108, which affirmed the Taylor case, supra, we said, “The real owner was still a company until such time as its affairs were liquidated, the debts paid and the residue distributed to the stockholders. The profit on the transaction was earned by the corporation and the assessment of the taxes based thereon was valid.” We further stated, “The trust was closed when the property was sold, the debts owing the corporation were collected, the debts of the corporation paid and the money distributed to the stockholders.” We, therefore, as above stated, concluded that the sale was by the corporation and not the stockholders.
The facts here are., in my opinion, in all essential respects the same as in the above cases. Though by February 19, 1946, all of the stock had been purchased and had passed to new stockholders, the corporation’s status had not changed. On February 23,1946, the stockholders voted to dissolve the corporation, appointing all directors thereof as “the trustees of the creditors and stockholders of this corporation”' to “have full power to settle the affairs, collect the debts and divide the moneys and other properties among the stockholders after paying the debts due and owing by said corporation * * *” and authorizing the president and directors to sell the property “belonging to said corporation in the name of said corporation and exercise full power and authority of said corporation over all such assets and properties.” On February 26 the secretary of state dissolved the corporation. On February 28 the purchasing company resolved to purchase the property, the bank building, “from the president and directors of the Development Company (Dissolved).” Seven hundred thousand dollars ($700,000) had been borrowed from the Mercantile Bank in order that the new stockholders might purchase the Development Co.’s stock; and the stock certificates for all of the Development Co. stock had been pledged to secure the $700,000 loan. On March 8 the stock certificates were canceled and were pasted in the stock book records of the Development Co. Also, on March 8 “the Development Company Dissolved,” by its president and directors and by them individually as grantors, conveyed the assets of the dissolved Development Co. to the purchaser or rather to the Investment Co., which was serving as a go-between, and on the same day the Investment Co. transferred the property to the ultimate purchaser. On March 8 the purchaser issued a $500,000 credit memorandum representing part of the purchase price to the “president and directors of the Development Company Dissolved and as trustee for creditors and stockholders of the Development Company.”
The findings of fact made by the majority do not indicate when the affairs of the Development Co. were finally closed, any debts paid, and the residue distributed to the stockholders.
In short, under the above facts, we have here a disposition of the corporate property, by its officers and directors as trustees, in the course of liquidation. It is obvious that liquidation and distribution were not completed at the time of the passage of title to the property on March 8, for on that date the $500,000 was received and the deed of that date recites that $230,000 of the purchase price is “to be paid and is payable hereafter according to a vendor’s lien note of even date * * With the property passing from the corporation through its officers as trustees who were specially authorized to convey the “property belonging to said corporation in the name of said corporation,” it is impossible for me to understand why the corporation did not make the profit, if any. The law that corporate directors have a duty to and are trustees for that corporation is so well settled as not to require citations — 'in addition to the fact that here they were specially authorized to act as trustees and acted as such in the sale. The Taylor and Hellebush cases are both merely examples of the general principle. In form, as well as in fact, the corporation sold this property. To refuse to attribute any profit made to the corporation is to refuse to recognize the corporate entity. It is clearly immaterial that a different group of stockholders had purchased the stock. The corporation subsisted as completely in the hands of one group as in the former. I can not conceive why a change of stockholders (the new stockholders thereafter proceeding to liquidate, but disposing of the property through their officers as trustees) should cause escape of the corporation from tax upon the sale of its property. That dissolution of the corporation by the state preceded the deed is immaterial, for the same was true in the Taylor case. The real test is not formal dissolution, but, as stated in the Hellebush case, is the fact that the real ownership is in the company until completion of liquidation, payment of debts, and distribution of residue. That is not the case here. Though I think Steubenville Bridge Co., 11 T. C. 789 , was wrongly decided, it is distinguishable from this case in that there the dissolution was not to the officers and directors as trustees, with power to sell on behalf of the corporation, as we find in this case. I would hold that the sale resulted in taxable gain to the corporation. I, therefore, respectfully dissent.