Case | HBS Case Collection | March 1999 (Revised June 2005)

Saevig Corporation

by Henry B. Reiling and Mark Pollard


The taxpayer purchased land and later transferred it to a family controlled corporation in return for an earn out. When funds were eventually received, the IRS treated them as dividends, whereas the individual and corporate taxpayers contended they were sums paid on the individual taxpayer's sale of a corporate asset to the corporation. The question is whether the original transfer to the corporation was a contribution to capital (equity) or the creation of a debtor/creditor relationship.

Keywords: Investment Return; Debt Securities; Taxation; Outcome or Result; Financial Reporting; Family Business; Assets; Business and Stakeholder Relations;


Reiling, Henry B., and Mark Pollard. "Saevig Corporation." Harvard Business School Case 299-082, March 1999. (Revised June 2005.)