Anna I. Woodworth v. Commissioner of Internal Revenue

STEWART, Circuit Judge.

The question here is whether the petitioners realized the equivalent of a taxable dividend in 1945 upon cancellation by a corporation of shares of stock standing in their names coincident with cancellation of their notes payable to the corporation. The Commissioner determined that the surrounding circumstances brought the transaction within the reach of § 115(g) of the Internal Revenue Code then in effect, 1 and assessed deficiencies. The Tax Court sustained the Commissioner, and the petitioners sought review here.

The controversy grows out of the acquisition of control…