The opinion
ALLEN, Circuit Judge
(dissenting).
I regret that I cannot agree with the conclusion of my colleagues. It is unnecessary to discuss the setoff allowed by the District Court against the undisputed tax claims. If the gain from the sale of the warehouse receipts was taxable to the corporation the Commissioner did not err in crediting the sums collected against the taxes which he asserted on the amount of such gain.
The gain was taxable to the corporation because the sale was made by the corporation, and not by the stockholders. While it is true that the committee consisting of certain dominant stockholders actually negotiated the sales of the whiskey warehouse receipts, they did this under authority of an agreement with the taxpayer embodied in a proposal made by the dominant stock-holding group and accepted by resolution *24 of the board of directors. On December 24, 1942, the majority group addressed a letter to the directors of the corporation, making a formal offer which was accepted by the directors of the corporation on December 28, 1942. The appellee concedes in its brief that this proposal and its acceptance resulted in a contract, and it was effective prior to the sale of the warehouse receipts, and prior to the execution of the assignments by which the taxpayer transferred the equity in the warehouse receipts to the two groups of stockholders. The proposal stated that the taxpayer had delivered to stockholders whiskey warehouse receipts representing 41,354 barrels of whiskey “as our collective share of the assets distributed to common stockholders by its board of directors on December 24, 1942, as a distribution in liquidation under the plan for the complete liquidation of said corporation adopted on December 24, 1942.” It further stated that it was believed to be to the best interest of all the stockholders of the corporation and desirable and beneficial to the remaining stockholders that the “distribution in kind” to such remaining stockholders “be sold, handled and disposed of in collaboration with the undersigned.” The dominant stockholders proposed to the taxpayer that they should “receive, hold, sell, handle, manage and dispose of,” the assets of the minority in a manner that would be for their “best benefit and advantage,” and that they would pay to each of such stockholders “his or her pro rata share of the equity in said assets, or the proceeds thereof, as soon as possible and practicable, according to sound business practice” provided that the minority stockholders deposited their stock for cancellation in the manner and at the time and place fixed in the plan of liquidation. They further proposed to indemnify the taxpayer against any claims arising from the delivery of the assets, and to cause the taxpayer to be released from its bank indebtedness of over $1,100,000.
. Under this contract the dominant group was obligated to handle the sale in accordance with the proposal, and was constituted the agent of the taxpayer in all subsequent transactions. This being the case, the sale was made by the taxpayer. In taxation the law looks through form to the substance. Commissioner v. Court Holding Co., 324 U.S. 331 , 65 S.Ct. 707 , 89 L.Ed. 981 ; Hellebush v. Commissioner, 6 Cir., 65 F.2d 902 .
The dividend declared by the taxpayer under its liquidation plan was in the net equity in the warehouse receipts, which -covered whiskey of various ages and blends, and therefore of different value. 'While the directors denominated this “a dividend' in kind,” there was no practicable way, as. testified and not controverted, to have-divided the whiskey among the stockholders, individually with any degree of equality. The property was received as property of the taxpayer corporation, subject to its debt and handled by the dominant group as agent-of the taxpayer. The distribution was not a distribution in kind. Whitney Realty Co., v. Commissioner, 6 Cir., 80 F.2d 429 , certiorari denied, 298 U.S. 668 , 56 S.Ct. 834 , 80 L.Ed. 1392 ; Hellebush v. Commissioner, supra.
The gain from the sale was therefore taxable to the .corporation.