Arkansas Best Corporation v. Commissioner of Internal Revenue (485 U.S. 212)
U.S. Supreme Court · decided March 7, 1988 · Supreme Court Database (Spaeth)
- Citation
- 485 U.S. 212 · 108 S. Ct. 971
- Decided
- March 7, 1988
- Term
- October Term 1987
- Vote
- 8–0
- Majority author
- Justice Marshall
- Issue area
- Federal Taxation
- Disposition
- Affirmed
- Outcome
- Petitioning party lost
- Ideological direction
- Liberal
Opinion excerpt
Justice Marshall delivered the opinion of the Court. The issue presented in this case is whether capital stock held by petitioner Arkansas Best Corporation (Arkansas Best) is a “capital asset” as defined in § 1221 of the Internal Revenue Code regardless of whether the stock was purchased and held for a business purpose or for an investment purpose. I Arkansas Best is a diversified holding company. In 1968 it acquired approximately 65% of the stock of the National Bank of Commerce (Bank) in Dallas, Texas. Between 1969 and 1974, Arkansas Best more than tripled the number of shares it owned in the Bank, although its percentage interest in the Bank remained relatively stable. These acquisitions were prompted principally by the Bank’s need for added capital. Until 1972, the Bank appeared to be prosperous and growing, and the added capital was necessary to accommodate this growth. As the Dallas real estate market declined, however, so too did the financial health of the Bank, which had a heavy concentration of loans in the local real estate industry. In 1972, federal examiners classified the Bank as a problem bank. The infusion of capital after 1972 was prompted by the loan portfolio problems of the bank. Petitioner sold the bulk of its Bank stock on June 30, 1975, leaving it with only a 14.7% stake in the Bank. On its federal income tax return for 1975, petitioner claimed a…
Excerpt of a 21,683-character opinion. The full text and citation network load in the interactive viewer above.