Raritan Co. v. Commissioner

GOODRICH, Circuit Judge.

In 1927 J. Seward Johnson borrowed $541,710 from the Chase National Bank to purchase from his uncle 1,667 shares of common stock of Johnson & Johnson, a manufacturer of medical, surgical and hospital supplies. In 1932, no reduction in the loan having been made, a plan was formulated whereby the dividends paid by Johnson & Johnson could be made available to liquidate the loan. About March 31, 1932, the petitioner herein was incorporated under the laws of Delaware and issued its entire capital stock to J. Seward Johnson in return for 30,000 shares of Johnson & Johnson…