The opinion
Opper, J., dissenting: If a distribution in property is made to stockholders and all that the transaction envisages is a receipt in kind, it may be that the aspect of gain 1 to the corporation lacks significance. But where the circumstances are such as to suggest that the true character of the operation is the receipt of cash the courts will, as ordinarily in surveying tax consequences, renounce the shadow and grasp the substance, and will treat as distributed that which it becomes plain the parties intended the corporation should relinquish and the stockholders should obtain. The principle broadly involved is that an assignment of anticipated future income will not relieve the assignor of tax.
Thus, in Commissioner v. Court Holding Co., 324 U. S. 331 , the gain from a sale purportedly carried out by stockholders was, notwithstanding a distribution of the property to them, attributed to the corporate predecessor. And in the much earlier case of Atlas Steamship Co., 18 B. T. A. 654, the proceeds of insurance policies on a lost vessel were viewed as cash distributions to the corporate taxpayer’s shareholders, resulting in gain to it, notwithstanding “that the stockholders were assigned the right to receive the proceeds of the insurance policies direct from the [insurance] companies rather than from the petitioner.” Of course, in that case the corporation, being on a cash basis, 2 would not have been chargeable with the gain represented by the excess of the insurance over the basis of the vessel until the insurance had actually been collected. On the assumption of the present case that a dividend in kind of the insurance could be declared before the cash was actually received, which would exculpate the corporation, Atlas Steamship Co. should have been decided the other way.
The Atlas Steamship doctrine in fact goes back to Ormsby McKnight Mitchel, 1 B. T. A. 143, 3 decided in 1924, which is in turn the direct progenitor of Lucas v. Earl, 281 U. S. 111 , and Burnet v. Leininger, 285 U. S. 136 , and the collateral ancestor of such more modern and familiar pronouncements as Griffiths v. Helvering, 308 U. S. 355 ; Helvering v. Horst, 311 U. S. 112 ; and Lusthaus v. Commissioner, 327 U. S. 293 .
It hence seems totally unnecessary to attempt to extend the doctrine of General Utilities & Operating Co. v. Helvering, 296 U. S. 200 , to such a proceeding as this. The facts make it clear that it was not property in the true sense of which petitioner was making a distribution. Petitioner was about to collect in cash the proceeds of the notes, which would then have been income to it upon receipt, and merely assigned to its stockholders this anticipated right to expected cash income. It was the prospective receipt of income from notes which had incidentally a zero basis that was anticipated and in fact dealt with. The course of conduct of the parties, the fact that the notes were mani-f estly regarded as collectible, at least to a significant extent, 4 the actual process of collection, the details of receipt and distribution, all unite in convincing proof that only upon the collection of the anticipated cash was there to be any real transfer from corporation to stockholder. Since respondent is proposing to add to petitioner’s income only the amount actually realized upon the notes in the month or two of the tax year succeeding the purported assignment, it seems to me this was clearly the income of the corporation before it came to the stockholders and that the deficiency should accordingly be sustained.
TuRnee, Hill, Harron, and Harlan, JJ., agree with this dissent. But the loss gander does not foUow the gain goose. R. D. Merrill Co., 4 T. C. 955 .
If it be suggested that the present petitioner is on the accrual basis, the case against it becomes even stronger. In that event, when the notes reached the point of being apparently collectible, as they clearly did in the present tax year, they were thereupon automatically accruable to petitioner as income. Clifton Manufacturing Co. v. Commissioner (C. C. A., 4th Cir.), 137 Fed. (2d) 290; certiorari denied, 302 U. S. 720 .
And see Mitchel v. Bowers (Dist Ct., S. Dist. N. Y.), 9 Fed. (2d) 414; affd. (C. C. A., 2d Cir.), 15 Fed. (2d) 287; certiorari denied, 273 U. S. 759 .
The findings show that notes which had only a “remote chance of collection’' were not assigned at all.