dissenting: All the facts in this proceeding were stipulated and, as stipulated, constitute the findings of fact herein. I shall recite sufficient of such facts to point the basis of my disagreement with the conclusion reached herein by the majority.
The petitioner held all of the issued and outstanding stock of KQY Broadcasting Co. The latter company owned and operated a radio broadcasting station in Pittsburgh, Pennsylvania. On February 28, 1945, by an instrument in writing executed by and between KQY Broadcasting Co., as grantor, and petitioner herein, as grantee, all of the “assets, and properties of every kind and description wheresoever situated of the grantor,” including “Any and all radio broadcasting licenses issued by Federal Communications Commission to the grantor, together with all the rights arid privileges of the grantor thereunder and including any extensions or renewals thereof,” were “sold, assigned, transferred, conveyed and delivered” to the grantee, the petitioner herein. The conveyance specifically included all intangible, as well as tangible assets, and “All moneys to be realized on account of any right of the Grantor to any refund on account of taxes paid.” The petitioner, in consideration of the conveyance above indicated, assumed all of the liabilities of KQV and simultaneously with the execution of the agreement surrendered to KQY all of the capital stock of the latter for cancellation.
As a result of the transactions evidenced by the agreement in question, KQV ceased all operations on February 28, 1945, and thereafter had no capital stock, no capital, no assets, no liabilities, and, consequently, no income and no expense. KQY was on that date, in accordance with the terms of the agreement, completely liquidated and it surrendered all its rights, privileges and powers to operate or carry on a business.
The agreement of February 28, 1945, was entered into pursuant to written consent of petitioner and an appropriate resolution of KQV’s board of directors, and it is stipulated that “KQV transferred all of its assets to petitioner in complete cancellation and redemption of all of the issued and outstanding capital stock of KQY.” It is also stipulated that the Federal Communications Commission authorized the transfer of the operating license of radio station KQV to petitioner and that “on February 28, 1945 the transfer was effected through a complete liquidation of KQY Broadcasting Company, all.of its assets being transferred and conveyed to Allegheny Broadcasting Corporation [petitioner] in complete cancellation and redemption of all of the issued and outstanding capital stock of KQV Broadcasting Company, all such stock being owned by Allegheny Broadcasting Corporation.”
The agreement of February 28, 1945, above referred to recites:
Whereas, the Grantee [petitioner], being the sole shareholder of the Grantor, has executed in writing a consent to the dissolution of the Grantor * * *; and
Whereas, the Grantor desires to transfer and convey to the Grantee all of its property, assets, franchises, licenses, rights, privileges and good will in complete liquidation and cancellation of all of the outstanding stock of the Grantor; and
Whereas, the Grantee desires to accept such transfer and conveyance in complete liquidation and cancellation of all of the issued and outstanding stock of the Grantor and to assume and agree to pay all of the obligations and liabilities of the Grantor;
Now, Therefore, this instrument witnesseth, that in consideration of the premises and of the delivery by the Grantee to the Grantor for cancellation of all the issued and outstanding stock of the Grantor, * * * and the assumption by the Grantee of all obligations and liabilities of the Grantor, the Grantor by these presents does assign, transfer, convey and deliver to the Grantee, etc.
The facts above set forth, having been stipulated, are included as the findings of fact in the majority report by reference to, and adoption of, the stipulations of fact, but are not all specifically set forth in the report.
The majority report sets forth the following findings of fact:
On February 27, 1945, FCG granted permisstón for transfer of the operating license and assets of Radio Station KQV to petitioner and on February 28, 1945, the transfer was effected. All the assets of KQV were transferred to petitioner and petitioner assumed all of its liabilities.
In view of the facts stipulated and found, the conclusion is unavoidable that KQV was completely liquidated on February 28, 1945, and it was so understood by the parties hereto. The petitioner in its brief requested that the following findings of fact be made:
On February 27, 1945 the FCO granted permission for transfer of the operating license and assets of Radio Station KQV from KQV to petitioner and on February 28, 1945 such transfer was effected in a complete liquidation of KQV.
A similar request was made by respondent in his brief.
It appears to me that the facts point inescapably to the conclusion that KQV was dissolved de facto on February 28, 1945. As I understand it, the majority holding to the contrary is based solely on the fact that KQV’s charter was not, and could not be, canceled in the year 1945 and that, since there could be no dissolution de jure of KQV in that year, there could be no dissolution de facto. The majority assumes the premise that there can be no dissolution de facto of a corporation prior to the time when a dissolution de jure may be effected. Such premise must be based on the erroneous theory that a corporation is created by an official issuance and registration of a certificate of incorporation, whereas, such certificate is merely the official recognition of a corporation created by its incorporators and an authorization to operate as such within the scope of its charter. Whether or not a corporation shall continue to exist as such is a matter wholly within the power of its stockholders and board of directors. When, as here, the stockholders and board of directors have taken action to put an end to the corporation and the functions for which it was created, there is nothing to which the authorization of the certificate of incorporation can apply. Such corporation is dead and dissolved in fact, whether or not the certificate of incorporation has been canceled.
Kamin Chevrolet Co., 3 T. C. 1076, presented a state of facts parallel to the facts here. Our holding in that case was contrary to the holding of the majority here. The majority attempts to distinguish the Kamin case, but clearly that can not be done. In that case we said:
The entire contention of the petitioner in this case rests upon the tenuous ground that it did not surrender its charter at the time that it was completely liquidated on June 30,1940. It claims that since under the laws of the Commonwealth of Pennsylvania it had a legal existence throughout the calendar year 1940, its return correctly covered the entire calendar year. It therefore argues that the respondent was in error in determining its excess profits net income for the year 1940 in accordance with the provisions of section 711 (a) (3) (A) of the Internal Revenue Code.
It may be conceded that technically the petitioner had a legal existence for the entire calendar year 1940. Under the laws of the Commonwealth of Pennsylvania a corporation’s charter is not canceled by a complete liquidation of the corporation. Some action must be taken either by the corporate officers or by the proper state authorities for the cancellation of the charter before the corporate existence ceases.
It does not follow from this that a corporation may not be dissolved for the purpose of the income and excess profits tax prior to the date that its charter is canceled. There may be a de facto dissolution even though there is no de jure dissolution. There can be no doubt that upon the stipulated facts there was a de facto dissolution of the petitioner corporation on June 30,1940. Thereafter the corporation had no capital, no income, and no expenses. It was a mere empty shell.
This Court then concluded: “Consequently, we think, the income of a corporation which has completely liquidated during a taxable year must be placed on an annual basis.”
I submit that the instant case falls squarely within the factual pattern of the Kamin case. Believing that the Kamin case was correctly decided, I can not agree with the conclusion of the majority here. I think, also, that in principle the instant case is not distinguishable from Pepsi Cola Co. v. Commissioner, 155 Fed. (2d) 921. My conclusion herein that there was a de facto dissolution of KQV on February 28, 1945, is likewise supported by Wier Long Leaf Lumber Co. v. Commissioner, 173 Fed. (2d) 549. Certainly, the instant case is distinguishable on its facts from both the Kingmam, and the Union Bus Terminal cases cited in the majority report and relied upon as supporting the conclusion reached therein. In neither of the latter cases was there a complete liquidation at the time the taxpayers ceased operations or within the taxable year involved.
TueneR, Disney, and LeMire, JJ., agree with this dissent.