293 U.S. 465 (1935)
In 1928, the petitioner owned all the stock of United Mortgage Corporation, which held 1,000 shares of Monitor Securities Corporation among its assets.1 For the sole purpose of transferring these shares to herself to sell them for individual profit, she arranged a reorganization under section 112(g) of the Revenue Act of 1928. This was done to reduce the income tax that would result from a direct dividend transfer.2 To accomplish this, she caused the Averill Corporation to be organized under Delaware law on September 18, 1928.3
Three days later, United Mortgage Corporation transferred the 1,000 Monitor shares to Averill Corporation in exchange for all shares of Averill, which were issued to the petitioner.4 On September 24, Averill was dissolved and liquidated by distributing the Monitor shares to the petitioner.5 No other business was ever transacted by Averill Corporation.6
The petitioner immediately sold the Monitor shares for $133,333.33.7 She reported a capital net gain of $76,007.88 based on an apportioned cost of $57,325.45.8 The Commissioner of Internal Revenue concluded that the reorganization was without substance and assessed tax as if United Mortgage had paid a dividend of the sale proceeds.9 The Board of Tax Appeals upheld the petitioner's position at 27 B. T. A. 223, but the circuit court of appeals reversed at 69 F. (2d) 809, finding no reorganization within the statute's meaning.10 The Supreme Court granted certiorari.11
Whether the creation of a new corporation, transfer of assets to it, and immediate liquidation of that corporation constituted a reorganization under § 112(i)(1)(B) of the Revenue Act of 1928 when undertaken solely to reduce income tax liability?12
Section 112(g) of the Revenue Act of 1928 provides that no gain is recognized on a distribution of stock or securities in pursuance of a plan of reorganization.13 Subdivision (i)(1)(B) defines reorganization to include a transfer by a corporation of all or a part of its assets to another corporation. The definition applies if immediately after the transfer the transferor or its stockholders or both are in control of the corporation to which the assets are transferred.14 The transfer must be made in pursuance of a plan of reorganization of corporate business and not merely a transfer having no relation to the business of either corporation.15
No. The transaction here lacked any business or corporate purpose apart from tax avoidance because Averill Corporation was organized on September 18, 1928 solely to receive the 1,000 shares of Monitor stock from United Mortgage Corporation three days later.16 The new corporation performed no other function and was dissolved on September 24, 1928 by distributing the shares to the petitioner, serving merely as a contrivance to transfer the Monitor shares without the tax consequences of a direct dividend.17
The creation of the new corporation, transfer of assets to it, and immediate liquidation of that corporation did not constitute a reorganization under § 112(i)(1)(B) of the Revenue Act of 1928 because the whole undertaking was in fact an elaborate and devious form of conveyance masquerading as a corporate reorganization and nothing else.18