United Nat'l Corp. v. Commissioner
United States Tax Court
Redemption of common stock in X corporation, which was owned by petitioner, held to be essentially equivalent to the distribution of a taxable dividend within the provisions of section 115 (g) of the Revenue Act of 1938; held, further, that the amount of the earnings or profits of the corporation which made the distribution included the amount of a gain realized in earlier years upon the redemption of all of the preferred stock.
1Opinion of the Court
OPINION.
HaeRon, Judge:
The Commissioner determined a deficiency of $3,224.86, in petitioner’s income tax for the fiscal year ended June 30, 1939, by applying section 115 (g) of the Revenue Act of 19381 to the redemption and cancellation of 75 percent of the common capital stock of Murphey, Favre & Co. (the Murphey Co.) owned by petitioner, which owned 100 percent of the stock of that company, and thus taxing a part of the amount received by petitioner as an ordinary dividend.
There was distributed to petitioner by the Murphey Co. the sum of $176,746.56, in cash and property, upon the surrender…
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