McWILLIAMS v. COMMISSIONER OF INTERNAL REVENUE (331 U.S. 694)
U.S. Supreme Court · decided June 16, 1947 · Supreme Court Database (Spaeth)
- Citation
- 331 U.S. 694 · 67 S. Ct. 1477
- Docket
- No. 945
- Argued
- May 8, 1947
- Decided
- June 16, 1947
- Term
- October Term 1946
- Vote
- 8–0
- Majority author
- Justice Vinson
- Issue area
- Federal Taxation
- Disposition
- Affirmed
- Outcome
- Petitioning party lost
- Ideological direction
- Liberal
How the Justices voted
- Majority
- Chief Justice Vinson (wrote), Justice R. H. Jackson, Justice Douglas, Justice Frankfurter, Justice Reed, Justice Black, Justice Rutledge, Justice Murphy
Opinion excerpt
Mr. Chief Justice Vinson delivered the opinion of the Court. The facts of these cases are not in dispute. John P. McWilliams, petitioner in No. 945, had for a number of years managed the large independent estate of his wife, petitioner in No. 947, as well as his own. On several occasions in 1940 and 1941 he ordered his broker to sell certain stock for the account of one of the two and to buy the same number of shares of the same stock for the other, at as nearly the same price as possible. He told the broker that his purpose was to establish tax losses. On each occasion the sale and purchase were promptly negotiated through the Stock Exchange, and the identity of the persons buying from the selling spouse and of the persons selling to the buying spouse was never known. Invariably, however, the buying spouse received stock certificates different from those which the other had sold. Petitioners filed separate income tax returns for these years, and claimed the losses which he or she sustained on the sales as deductions from gross income. The Commissioner disallowed these deductions on the authority of § 24 (b) of the Internal Revenue Code, which prohibits deductions for losses from “sales or exchanges of property, directly or indirectly . . . Between members of a family,” and between certain other closely related individuals and corporations. On the taxpayers’ applications to…
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