Pioneer Parachute Co. v. Commissioner
United States Tax Court
Parent corporation owning 600 of 1,000 shares of common voting stock of a subsidiary desired to obtain the 95 percent ownership required for consolidated return purposes. Pursuant to plan, 398 shares of new class B preferred stock were issued by subsidiary and exchanged for 398 shares of its common stock held by two minority stockholders.
Read the full summary
Parent corporation owning 600 of 1,000 shares of common voting stock of a subsidiary desired to obtain the 95 percent ownership required for consolidated return purposes. Pursuant to plan, 398 shares of new class B preferred stock were issued by subsidiary and exchanged for 398 shares of its common stock held by two minority stockholders. Although the certificates for new stock stated that it was nonvoting, they provided that it could be converted into common stock, and that if a holder notified the secretary prior to any stockholders' meeting of his intention to convert, the meeting could…
1Opinion of the Court
OPINION.
Harlan, Judge:
The pertinent provisions oí the Internal Revenue Code are set forth in the margin.1
The respondent contends that because of the nature of the class B preferred stock issued to Ford and Smith, Cheney Brothers did not own 95 percent of the voting stock of the petitioner during 1941, and that stock which it did not own was also not limited and preferred as to dividends as required under section 730 of the code. Therefore respondent contends that these corporations were not entitled to join in consolidated returns for that year. In support of his contention respondent urges…
2Cases cited4 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- Higgins v. SmithSupreme Court of the United States · 1940
- Commissioner v. SmithSupreme Court of the United States · 1945
- Dow Chemical Co. v. Halliburton Oil Well Cementing Co.Supreme Court of the United States · 1945
3Cited by2 opinions
- Slover v. CommissionerUnited States Tax Court · 1946
- Pioneer Parachute Co. v. CommissionerUnited States Tax Court · 1946