RESPONDENT: Smith et al.
LOCATION: Residence of Jacobson
DOCKET NO.: 90-1361
DECIDED BY: Rehnquist Court (1991-1993)
LOWER COURT: United States Court of Appeals for the Eleventh Circuit
CITATION: 503 US 47 (1992)
ARGUED: Dec 04, 1991
DECIDED: Feb 25, 1992
Herbert Stettin - on behalf of the Respondents
Kent L. Jones - on behalf of the Petitioners
Facts of the case
Media for Holywell Corporation v. SmithAudio Transcription for Oral Argument - December 04, 1991 in Holywell Corporation v. Smith
Audio Transcription for Opinion Announcement - February 25, 1992 in Holywell Corporation v. Smith
William H. Rehnquist:
The opinion of the Court in Holywell Corporation against Smith and a companion case will be announced by Justice Thomas.
These cases come to us on a writ of certiorari to the United States Court of Appeals for the Eleventh Circuit.
Petitioners Holywell Corporation, Theodore B. Gould, and several affiliated debtors attempted to develop a hotel and office building in Miami, Florida.
After encountering financial difficulties, they all filed Chapter 11 bankruptcy petitions.
In a consolidated reorganization plan, they agreed to place their assets in trust and to have a trustee, respondent Fred Stanton Smith, distribute their property.
The Bankruptcy Court declared that Smith did not have to pay any federal income tax as for the debtors because the reorganization plan said nothing about taxes.
The District Court and the Court of Appeals affirmed this declaration.
In an opinion filed today with the Clerk, we reverse.
The Internal Revenue Code ties a duty to pay federal income taxes to the duty to make an income tax return.
Section 6012(b)(3) of the Code requires the assignee of all or substantially all of the property of a corporation to make a tax return for the corporation.
Because respondent, Smith, meets the ordinary definition of an assignee, he must make a return and pay taxes for Holywell Corporation and the other corporate debtors.
Smith also has a duty under Section 6012(b)(4) to make a tax return as a trustee of a trust.
He, therefore, has to pay tax on the income earned by the trust property attributable to debtor, Theodore B. Gould.
The opinion of the Court is unanimous.