Commissioner of Internal Revenue v. Zelie Berenbaum and Harriet Berenbaum

SETH, Circuit Judge.

The Commissioner filed notices of deficiency against the taxpayer and others in connection with their income tax returns for 1959 and 1960. He determined that redemptions of preferred shares of stock in a closely held corporation from the taxpayer and others were essentially equivalent to the distribution of taxable dividends under § 302(b) (1) of the 1954 Internal Revenue Code.

The Tax Court considered the two re-demptions and held that one was essentially equivalent to a dividend but that the other was not. The Commissioner is the petitioner here and seeks review of the…