Humphryes Mfg. Co. v. Commissioner
United States Board of Tax Appeals
In 1936 petitioner's issued and outstanding stock consisted, in part, of 8 percent cumulative preferred stock on which undeclared dividends were in arrears. In pursuance of a plan of recapitalization, holders of the 8 percent preferred stock surrendered the stock in exchange for new 6 percent preferred stock and new common stock. The stockholders received a small amount of cash in payment of fractional shares involved in the exchange.
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In 1936 petitioner's issued and outstanding stock consisted, in part, of 8 percent cumulative preferred stock on which undeclared dividends were in arrears. In pursuance of a plan of recapitalization, holders of the 8 percent preferred stock surrendered the stock in exchange for new 6 percent preferred stock and new common stock. The stockholders received a small amount of cash in payment of fractional shares involved in the exchange. Petitioner claims that part of the new preferred stock which was distributed was a stock dividend and that the undeclared dividends in arrears were paid by a…
1Opinion of the Court
*116OPINION.
HaRROn:
Petitioner admits that there was a recapitalization in 1936 within the provisions of section 112 (g) (1) (D) of the Revenue Act of 1936, and, consequently, a reorganization. There is no dispute about the facts. The stockholders of petitioner exchanged old stock *117for new stock of the same corporation as an incident to a reorganization by recapitalization. A small amount of cash was distributed to the stockholders along with the new stock. In spite of petitioner’s recognition that the exchanges in question were made pursuant to a reorganization, petitioner endeavors to find in the…
2Cited by2 opinions
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