Facts
- [A.X.] and [B.X.] née [Y.] (the taxpayers) operated a sole proprietorship based in [C.] /VS. - In 2000, [D. AG] waived a claim of CHF 300,000 to restructure the sole proprietorship. This waiver of the claim was recorded in the books without affecting the profit. - On April 3, 2003, the taxpayers, together with other persons, founded Hotel [E. AG] , which took over the business of the sole proprietorship. The waiver of the claim of CHF 300,000 was not included in the opening balance sheet of the new AG. - The Tax Administration of the Canton of Valais then assessed a liquidation gain for 2002 in the amount of CHF 232,274, as the waiver of the claim had not been written off without affecting the profit. - The taxpayers contested the assessment, but were only partially supported by the Tax Appeal Commission of the Canton of Valais. They then appealed to the Federal Supreme Court.Considerations
- The Federal Supreme Court dismisses the appeal. It holds that the waiver of the claim in the amount of CHF 300,000 is to be treated as an effective restructuring gain for business management, commercial and tax purposes. Since this amount was not written off without affecting the profit, there is a taxable liquidation gain. - The Federal Supreme…