Sections 301 and 316(a) of the Internal Revenue Code set the conditions for treating certain corporate distributions as returns of capital, nontaxable to the recipient.... The question here is whether a distributee accused of criminal tax evasion may claim return-of-capital treatment without producing evidence that either he or the corporation intended a capital return when the distribution occurred. We hold that no such showing is required.
Read the Court's unanimous opinion [text] per Justice Souter.
In Warner-Lambert v. Kent [LII case backgrounder], the Court affirmed [text] the US Court of Appeals for the Second Circuit's decision [PDF text] in the case. The Supreme Court's one sentence per curiam opinion noted that the justices split 4-4 on the case, with Chief Justice Roberts taking no part in the decision. The Court heard oral arguments [transcript, PDF] just last week to consider whether federal law preempts a Michigan law that allows personal injury lawsuits against prescription drug manufacturers only when the drug at issue was approved by the US Food and Drug Administration based on the fraudulent submission or withholding of information. SCOTUSblog has more on both cases.
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