Webb v. Commissioner
United States Tax Court
In a redemption that qualified under sec. 302(a), I.R.C. 1954, corporation C, a cash method taxpayer, redeemed 50 percent of its outstanding preferred stock at less than the issuance price of such stock. Held, under sec. 312(e), I.R.C. 1954, the full amount of the redemption distribution is properly chargeable to the capital account of the preferred stock. Held, further, in computing C's earnings and profits, it may not reduce such account by its unpaid but accrued taxes.
1Opinion of the Court
OPINION
Simpson, Judge:
The Commissioner determined the following deficiencies in the petitioner’s Federal income taxes:
Year Deficiency
1968. $111,129.99
1969. 80,400.46
1970. 201,071.07
The petitioner claims an overpayment of taxes for 1968 in the amount of $61,595.43.
Numerous issues have been settled by the parties; only two remain for our consideration: (1) Whether a redemption of preferred stock at less than its issuance price has any effect on the earnings and profits of the redeeming corporation; and (2) whether Federal income taxes reduce the earnings and profits of a cash method corporation…
2Cases cited36 opinions
- Jack E. Golsen and Sylvia H. Golsen v. Commissioner of Internal RevenueCourt of Appeals for the Tenth Circuit · 1971
- Commissioner v. South Texas Lumber Co.Supreme Court of the United States · 1948
- Bingler v. JohnsonSupreme Court of the United States · 1969
- Enoch v. CommissionerUnited States Tax Court · 1972
- Commissioner v. WheelerSupreme Court of the United States · 1945
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3Cited by10 opinions
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- Mazzocchi Bus Co., Inc. v. Commissioner of Internal Revenue Service. Nicholas Mazzocchi Estate of Rose Marie Mazzocchi, Deceased, Mary Mazzocchi v. Commissioner of Internal Revenue ServiceCourt of Appeals for the Third Circuit · 1994
- Wicker v. CommissionerUnited States Tax Court · 1993
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