Fehrs Finance Co. v. Commissioner
United States Tax Court
EF and VF, husband and wife, owned all the stock in R, a corporation. Within a period of about 3 months, (1) EF gave some of his stock to VF, and to their son-in-law, daughters, and grandchildren, (2) the petitioner was incorporated, with the daughters of EF and VF as the sole shareholders, (3) EF and VF transferred the remainder of their stock in R to the petitioner in return for the petitioner's promise to pay them lifetime annuities, and (4) the petitioner sold all of the…
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EF and VF, husband and wife, owned all the stock in R, a corporation. Within a period of about 3 months, (1) EF gave some of his stock to VF, and to their son-in-law, daughters, and grandchildren, (2) the petitioner was incorporated, with the daughters of EF and VF as the sole shareholders, (3) EF and VF transferred the remainder of their stock in R to the petitioner in return for the petitioner's promise to pay them lifetime annuities, and (4) the petitioner sold all of the stock so acquired to R, in exchange for cash and a note, and R canceled such stock. Held: (1) The transaction in which…
1Opinion of the Court
Simpson, Judge:
The respondent has determined a deficiency of $32,459.07 in the petitioner’s Federal income tax for the year ended November 30,1965. In a transaction which we conclude was a redemption under section 304(a) (1) of the Internal Revenue Code of 1954,1 the petitioner acquired stock in exchange for a promise to pay two annuities, and immediately thereafter it sold such stock prior to making any annuity payments. To determine the petitioner’s basis in such stock, we must decide whether the redemption was essentially equivalent to a dividend under section 302(b) (1), whether the…
2Cases cited30 opinions
- United States v. DavisSupreme Court of the United States · 1970
- Cary v. CommissionerUnited States Tax Court · 1963
- Eva D. Bradbury v. Commissioner of Internal RevenueCourt of Appeals for the First Circuit · 1962
- Edgar v. CommissionerUnited States Tax Court · 1971
- Beatrice Levin v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1967
25 more not listed; retrieve them via the Exa API.
3Cited by29 opinions
- Fehrs v. United StatesUnited States Court of Claims · 1980
- Benjamin v. CommissionerUnited States Tax Court · 1976
- Metzger Trust v. CommissionerUnited States Tax Court · 1981
- Niedermeyer v. CommissionerUnited States Tax Court · 1974
- Estate of Gunland v. CommissionerUnited States Tax Court · 1987
24 more not listed; retrieve them via the Exa API.