The taxpayer, who held American Depositary Receipts for a Mexican public company (Telmex) became the owner of an equal number of shares of another Mexican company (America Movil) pursuant to a spin-off transaction implemented by Telmex. The spin-off was implemented using a Mexican corporate law procedure called "escisión" or "split-up" under which an existing company is divided, creating a new company to which specified assets and liabilities are allocated.
In finding that the distribution received by the taxpayer was not taxable to her as a dividend or otherwise as income, Miller J. indicated (at p. 2440) that: "what occurred is more akin to a stock split than a stock dividend" and stated (at p. 2439):
"As part of the reorganization, Telmex arranged that its shareholders receive the America Movil shares, not as part of any distribution of profits, but as recognition of a shift of capital from Telmex to America Movil."