Opinion · Supreme Court of the United States

Planters Cotton Oil Co. v. Hopkins

286 U.S. 332

Type
Opinion
Court
Supreme Court of the United States
Jurisdiction
Federal
Date
1932-05-16
Topic
general

*333 Mr. Justice Cardozo delivered the opinion of the Court. Three corporations, Planters Cotton Oil Co., Inc., Waxahachie, Planters Cotton Oil Co., Inc., Ennis, and Farmers Gins, Inc., were organized under the laws of Texas in August and September, 1924. Two joint stock associations, Planters Cotton Oil Company, Waxahachie, and Planters Cotton Oil Company, Ennis, which had been organized in earlier years, retained their separate existence. One man, H.

Citator

UpLaw has not yet analyzed Planters Cotton Oil Co. v. Hopkins. The absence of a flag is not a finding that it is good law.

Cited by
62 opinions

Headnotes

  1. Tax Law — Deductions Net losses suffered by unincorporated joint stock associations in a year preceding their affiliation with newly formed corporations are not deductible in a consolidated income tax return of the affiliated companies, because the corporations that succeeded to the associations' assets are not identical with the associations, and losses incurred by the associations in an earlier year are not the losses of the corporations formed afterward. 286 U.S. at 333
  2. Tax Law — Corporate Identity and Loss Deduction That a single shareholder owns substantially all the shares of both the predecessor unincorporated associations and the successor corporations does not alter the analysis: the shareholder was free to continue the business in unincorporated form, and having chosen the privileges of corporate organization by forming corporations to carry on the business, he cannot treat the corporations as identical with the unincorporated associations whose assets they succeeded. 286 U.S. at 333
PLANTERS OIL CO.v. HOPKINS,286 U.S. 332(1932)
52 S.Ct. 509
PLANTERS COTTON OIL CO., INC., ET AL.v. HOPKINS, COLLECTOR OF INTERNAL
REVENUE.
CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE FIFTH CIRCUIT.
No. 672.
Argued April 20, 1932.
Decided May 16, 1932.
The owner of substantially all of the stock of two joint stock associations caused their assets to be transferred to three corporations which he formed for carrying on the business and of which he owned substantially all the shares.Heldthat in a consolidated income tax return of all the companies net losses suffered by the joint stock associations during the year preceding the affiliation were not deductible.WoolfordRealty Co. v.Rose, ante, p. 319. P. 333.53 F.2d 825, affirmed.
CERTIORARI,285 U.S. 533, to review the affirmance of a
judgment,47 F.2d 659, dismissing the petition in an action to
recover an alleged overpayment of income taxes.
Messrs. J.M. BurfordandWm. A. Sutherland, with whomMessrs. Joe A. WorshamandJ.L. Gammonwere on the brief, for petitioners.Mr. Whitney North Seymour, with whomSolicitor GeneralThacher, Assistant Attorney General Youngquist, andMessrs.Sewall Key, Norman D. Keller, andWm. H. Riley, Jr., were on the brief, for respondent.Messrs. Frederick H. Wood, Hoyt A. Moore, andA. JamesSlater, by leave of Court, filed a brief asamici curiae.Page 333
MR. JUSTICE CARDOZO delivered the opinion of the Court.
Three corporations, Planters Cotton Oil Co., Inc., Waxahachie, Planters Cotton Oil Co., Inc., Ennis, and Farmers Gins, Inc., were organized under the laws of Texas in August and September, 1924. Two joint stock associations, Planters Cotton Oil Company, Waxahachie, and Planters Cotton Oil Company, Ennis, which had been organized in earlier years, retained their separate existence. One man, H.N. Chapman, was the owner of 98% of the shares of the unincorporated associations. He caused the assets of those associations, or substantially all of them, to be transferred to the newly organized corporations, and received in return substantially all the shares of stock.

For the fiscal year ending June 30, 1925, the three corporations and the two joint stock associations filed a consolidated income tax return wherein the corporations, which had earned a net income of $147,636.25, claimed a deduction of $78,399.25 for loss suffered by the associations during the year preceding the affiliation. The deduction was disallowed, and suit was brought by the corporation and the associations for the refund of the tax to the extent of the overpayment claimed. The District Court dismissed the petition,47 F.2d 659; the Court of Appeals affirmed,53 F.2d 825; and by certiorari the case is here.

The controversy is ruled by our judgment inWoolford RealtyCo. v.Rose, ante, p. 319, unless the fact that in this case one shareholder, Chapman, was the owner of substantially all the shares of the five affiliated companies supplies an essential element of difference. We think it does not. Chapman was free, if he desired, to continue to do business in an unincorporated form. Preferring thePage 334privileges of corporate organization, he brought into being three corporations and did business through them. These corporations are not identical with the unincorporated associations to whose principal assets they have succeeded, and the losses of the associations suffered in an earlier year are not the losses of the corporations that came into existence afterwards.

The judgment isAffirmed.