Arrowsmith v. Commissioner
United States Supreme Court
344 U.S. 6 (1952)
Relevant factsFree
Bauer and another shareholder (plaintiffs) properly treated 1937-1940 corporate liquidation distributions as capital gains, but in 1944 were held liable, as transferees of the liquidated assets, for a judgment entered against the dissolved corporation and Bauer individually; they deducted the 1944 payment as an ordinary loss, but the Commissioner (defendant) ruled it must be treated as a capital loss tied to the earlier liquidation.
IssueFree
Whether a loss incurred in connection with the exchange of a capital asset in a prior taxable year should be treated as a capital loss.