For the calendar year 1940 the Commissioner assessed additional taxes growing out of a failure of Court Holding Company to return a gain on a sale of real estate as realized by it, instead of by its stockholders who had returned it. A fraud penalty was also imposed. The Tax Court held that the sale was to be attributed to the corporation and upheld the tax, but that though an incorrect position in law had been taken by the corporation, there was no suppression of the facts, and a fraud penalty was not justified. The corporation is here contending that it does not owe the tax.
The fact as found by the Tax Court are fully stated in 2 T.C. 531. The Court Holding Company was a mere holding company, having as its only asset a building in Florida called Mayfield Court Apartments. Its only business was the leasing of this building. There were 50 shares of stock, owned 48 by Minnie Miller and 2 by her husband Louis Miller. He was president of the Company and their son Harry Miller was secretary. Minnie Miller was a director. The current lease was for three years, beginning October 1, 1938, and the rental was due $2,000 October 1, $1,-000 December 15, $1,500 January 15, $2,-000 February 1, $2,000 February 20, for each year. There was an initial deposit also of $2,000 to secure general performance of the lease. During the fall of 1939 the lessees Aaron and Regina Feiwish, and *824a sister and her husband named Fine, began negotiations to buy the property. During February, 1940, Louis Miller, the corporation’s president, and the Fines orally agreed on a sale at a price of $54,500, and on February 23 they met in the office of a lawyer employed by the Fines to make and execute a written contract, Harry Miller, the corporation’s secretary, also being present. The attorney prepared a written contract, but it was never executed. The property had been bought during the depression at a low price at judicial sale, and the Millers were advised that if the corporation sold and realized the gain and then distributed it to its stockholders, very heavy and duplicated income taxation would result. On February 23rd they notified the Fines that the corporation could not consummate the sale for the reason that very large income.taxes would result. That afternoon the three directors of the corporation met with their accountant, and in a formal directors’ meeting resolved that the corporation should “declare a dividend payable in the assets of the corporation, in complete liquidation and surrender of all the outstanding corporate stock”. A resolution was then passed declaring the dividend, “payable in all the assets of the corporation, (describing the building and its equipment), subject to a first mortgage * * * and a second mortgage * * * and further subject to a lease between the corporation and Aaron and Regina Feiwish * * * in complete liquidation and surrender of all the corporate stock of the corporation, held by Louis and Minnie Miller”. A formal stockholders’ meeting was then held in which the resolution of the directors was ratified and confirmed, Louis Miller and Minnie Miller both signing the minutes. Thereafter on the same afternoon the corporation executed its deed covering the property to Louis Miller and Minnie Miller, which was duly recorded. On February 26 the Fines’ attorney on request of the Millers drew a new contract providing for the same purchase price and conditions that had been agreed on February 23, except for a correction in the balance due on one of the mortgages to be assumed, and this contract was executed by Louis and Minnie Miller as sellers and Mrs. Fine as purchaser. The contract recited the payment down of $1,000, and that if the title was approved other payments were to be made, and credit allowed for the $2,000 on deposit to secure the lease. The Tax Court finds that the $1,000 paid down was the application of a check for $1,000 paid January 5 by Aaron Feiwish to the Millers, but whether originally as a loan or for rent is not stated. The $2,-000 deposit to secure the lease also belonged to the lessees, and their consent to the surrender of the lease had to be obtained. The record is silent as to how these matters were arranged, but evidently the lessees and their sister, Mrs. Fine, had an understanding about them. Title was finally transferred by the Millers to Mrs. Fine on April 1, 1940. The corporation has owned no property since the transfer of its assets, and has done no business, but was not formally dissolved, the Florida law holding it intact for a time to settle its affairs.
The Tax Court concluded on these facts that the sale was really made by the corporation, that the transfer of the property to the stockholders “was in fact subject to the petitioner’s prior agreement to sell, and the sale, although in form by the stockholders, was in reality in performance of the prior agreement”. We think this conclusion not sustainable.
In Florida an agreement to sell land is unenforcible unless evidenced by a writing. Comp.Gen.Laws of 1927, § 5779, F.S.A. § 725.01. The $1,000 paid on January 5th, and finally applied on the purchase, as the tax court found, could not then have been a payment on a contract of purchase, because no agreement to sell had been reached till late in February; but if so considered, because later so applied with Feiwish’s consent, under the Florida law a part payment would give no validity to an oral contract to sell land. Tate v. Jones, 16 Fla. 217; Williams v. Bailey, 69 Fla. 225, 67 So. 877; Maloy v. Boyett, 53 Fla. 956, 43 So. 243; Fireman’s Fund Ins. Co. v. Craven, 101 Fla. 155, 134 So. 232. The corporation was never bound by any writing. It was free on February 23 to declare that it would not go forward with the sale, for any reason or no reason. It did so declare, and thereafter there was not even an oral contract. There was no sale agreement binding the property subject to which the Millers took title. The corporate minutes show that they took subject to two mortgages and the lease, and to nothing else. They were free to sell or not sell. They were free if they chose to propose, as they did, to sell on the same *825terms which had been before discussed. Mrs. Fine was in nowise bound to buy, but she too was free so to agree.
As we see it, the controlling fact is that there was no binding agreement to sell made by the corporation, and even the oral agreement was called off. The Millers wished to sell the property and realize their gain. It could lawfully be done in either of two ways: 1. The corporation could sell and distribute the gain. Or 2. The corporation could liquidate, transfer the property to its stockholders, and they could sell. The tax consequences were more favorable under the latter plan. The Millers found this out in time, before the corporation became bound to sell, and followed the latter plan. The corporation was actually and fully liquidated. It had after February 23 neither property, business nor capital stock. This of course was all done to avoid heavy corporation taxes, but the purpose to escape or reduce taxation in making such a choice of procedure is not unlawful. The procedure actually followed is taxable by the law applicable to it. United States v. Isham, 17 Wall. 496, 21 L.Ed. 728; Gregory v. Helvering, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596, 97 A.L.R. 1355; Chisholm v. Commissioner, 2 Cir., 79 F.2d 14. This case is like Commissioner v. Falcon Co., 5 Cir., 127 F. 2d 277, rather than Trippett v. Commissioner, 5 Cir., 118 F.2d 764, 765. The Millers have paid taxes on the gain realized as individuals. The defunct corporation cannot rightly be resurrected to be taxed for a sale it did. not make. The tax ought to be redetermined accordingly. The case is remanded to this end.
Judgment reversed.