Gregory v. Helvering
Supreme Court
293 U.S. 465 (1935)
Ms. Gregory (plaintiff), sole shareholder of United Mortgage Corporation, arranged a corporate reorganization solely to transfer United's shares in Monitor Securities Corporation to herself in place of an ordinary dividend distribution, fully complying with the technical statutory requirements for a tax-favored reorganization; she reported the resulting stock transfer as capital gain rather than ordinary dividend income, the tax commissioner (defendant) assessed a deficiency, the Board of Tax Appeals ruled for Gregory, and the court of appeals reversed in the commissioner's favor before the Supreme Court granted certiorari.
Whether a corporate reorganization that technically complies with the statutory requirements for capital-gain treatment, but serves no independent business purpose beyond avoiding ordinary income tax on a dividend, qualifies for favorable tax treatment.