This suggests that the court might have reached a different result if the original employer had discontinued the plan contemporaneously with the transfer of assets. Then in Mary Miller, 22 T.C. 293 (1954), aff'd, 226 F.2d 618 (6th Cir. 1955) (per curiam), and in Lester B. Martin, 26 T.C. 100 (1956), the Tax Court held that a lump-sum distribution incident to the liquidation and dissolution of the taxpayer's corporate employer and the termination of its retirement fund qualified for capital gains treatment. The fact that the taxpayers in each case were employed by the successor company did not prevent the transaction from being a "separation from the service" of their former employers.

On the other hand, two earlier decisions of this Court based upon section 165(b), I.R.C. 1939, held that when, pursuant to a corporate reorganization, all the assets and liabilities of one corporation are transferred to another and the transferor corporation is dissolved, the employees of the transferor corporation are ‘separated from the service’ of their employer as of the date of dissolution, even though there is no change in the management, policies, or personnel of the transferor corporation. Mary Miller, 22 T.C. 293 (1954), affirmed per curiam 226 F.2d 618 (C.A. 6, 1955); Lester B. Martin, 26 T.C. 100 (1956). The rationale of these cases has been tacitly accepted in some cases as applicable to section 402(a)(2), e.g., Jack E. Schlegel, supra; Rybacki v. Conley, 340 F.2d 944 (C.A. 2, 1965); Thomas E. Judkins, 31 T.C. 1022 (1959); but it has been seriously questioned by others, e.g., United States v. Johnson, supra; United States v. Martin, supra; E. N. Funkhouser, supra.

Oliphint in effect declared, as the Government contends here, that a change of stock ownership in itself is not a change of employers and therefore does not constitute separation from service. In Lester B. Martin, 1956, 26 T.C. 100, Sperry Corporation acquired all of the stock of Dellinger Manufacturing Company for cash and operated it as a subsidiary for about six months. Dellinger was then liquidated and all of its assets transferred to Sperry.

11 to Gary Price was not on account of his death and, therefore, the sole issue is whether or not the distribution was "on account of" the separation of Gary Price from the service of his employer. Mary Miller, 22 T.C. 293 (1954), aff'd per curiam, 226 F.2d 618 (6th Cir. 1955), and Lester B. Martin, 26 T.C. 100 (1956), provide that a distribution incident to the change of ownership and liquidation of the taxpayers' corporate employer and the termination of its retirement plan qualify as a lump sum distribution eligible for capital gains treatment under Section 402(a)(2) even though the taxpayer continues to work for the successor corporation. The rationale is that the employee separated from the service of the employer where the corporate employer no longer exists.

In support of his contention that he was in fact separated from the service of Northwest — and thus eligible to take advantage of the provisions of Section 402(a)(2) — taxpayer cites and relies on the cases of Miller v. Commissioner, 22 T.C. 293, aff'd sub nom. C.I.R. v. Miller, 6 Cir., 226 F.2d 618 (1955), and Martin v. Commissioner, 26 T.C. 100, with emphasis also placed on Revenue Ruling 65-147 and the discussion of the Court in Funkhouser v. C.I.R., 4 Cir., 375 F.2d 1 (1967). In support of its position, Defendant places major reliance on United States v. Martin, 8 Cir., 337 F.2d 171 (1964), United States v. Johnson, 5 Cir., 331 F.2d 943 (1964), and Nelson et al. v. United States, D.Idaho, N.D., 222 F. Supp. 712 (1963).

It then went on to point out: Lester B. Martin, 26 T.C. 100 (1956), (A) 1958-1 Cum.Bull. 7. "Nevertheless, it is considered that the [Martin result] might be reached on similar facts under section 402(a)(2) of the Code, provided the acquisition of stock of the liquidated corporation and the later liquidation may be regarded as an integrated transaction in substance involving the purchase of the assets of the former employer corporation.

Although the Tax Court of the United States has on several occasions been called upon to interpret the phrase "separation from the service" as used in Section 402 and its predecessor in the 1939 Code, Section 165(b), 26 U.S.C. § 165(b), we have been referred to no case involving the same fact situation as that presently before this court. In support of their contention that a separation from the service occurred when a transfer of Universal stock by Sears disqualified employees of Universal from membership in the pension fund, the plaintiffs rely heavily on the cases of Miller v. Commissioner, 1954, 22 T.C. 293, affirmed, 6 Cir., 1955, 226 F.2d 618, and Martin v. Commissioner, 1956, 26 T.C. 100. Unfortunately for plaintiffs, however, the events giving rise to their claim in no perceptible degree approximate the substantial corporate changes and transactions that led the courts in Miller and Martin to conclude that there was a "separation from the service" of the taxpayer's employer within the meaning of the pertinent statute. In the Miller case, the pension fund was discontinued when the assets of the corporation which instituted the fund were transferred to another company and the former corporation was dissolved, and in the Martin case, the fund was discontinued when all of the corporate stock of the corporation which instituted the fund was purchased by another company and the former corporation was dissolved.

Rev. Rul. 72-440, 1972-2 C.B. 225, 226. There is further conflict on whether our decisions in Miller v. Commissioner, 22 T.C. 293 (1954), affd. per curiam 226 F.2d 618 (6th Cir. 1955), and in Martin v. Commissioner, 26 T.C. 100 (1956), have been abrogated by the 1954 Internal Revenue Code, although the majority of this Court has so held. Gittens v. Commissioner, supra.

Rev. Rul. 72-440, 1972-2 C.B. 225, 226. There is further conflict on whether our decisions in Miller v. Commissioner, 22 T.C. 293 (1954), affd. per curiam 226 F.2d 618 (6th Cir. 1955), and in Martin v. Commissioner, 26 T.C. 100 (1956), have been abrogated by the 1954 Internal Revenue Code, although the majority of this Court has so held. Gittens v. Commissioner, supra.

Section 402(a)(2) requires something more, however; the relevant inquiry under that statute is not simply the sequence of events surrounding the distribution from the plan but rather the origin of the distributee's right to receive the distribution. United States v. Johnson, 331 F.2d 943, 952 (C.A. 5, 1964); Wysong v. United States, 326 F.Supp. 1384, 1387 (D. Minn. 1971); Maurice Osterman, 50 T.C. 970, 972, 974 (1968); Jack E. Schlegel, 46 T.C. 706, 710 (1966); Lester B. Martin, 26 T.C. 100, 106 (1956); Mary Miller, 22 T.C. 293, 301 (1954), affirmed per curiam 226 F.2d 618 (C.A. 6, 1955). The facts of this case show that petitioner's right to receive the distribution on question originated in the termination of the plan and was implemented in accordance with the termination provision of such plan (sections 12 and 14).