The taxpayer was the sole individual shareholder of a personal corporation ("LVG") which, in turn, owned approximately 1/3 of the common shares of another corporation ("Trident") which was engaged in the oil business through holding controlling shareholdings in three corporations. Trident realized proceeds as a result of a sale of the most valuable of these subsidiaries and distributed the proceeds to its shareholders, including LVG, on March 22, 1971 and on August 3, 1971 in anticipation of the liquidation and winding-up of Trident.
Collier J. found (at p. 5324) that "as a practical matter there was a 'discontinuance or reorganization' of Trident's business in 1971 and that the amounts received were "on" such event notwithstanding that they were in anticipation of the formal winding-up of Trident and that there was a possibility, due to warranties given on the sale, that some of the money received might have to be returned.