Kessner v. Commissioner
United States Tax Court
Petitioners' preferred stock was redeemed pro rata by their closely held corporation under circumstances in which (1) there was no diminution of their proportionate interest in the corporation; (2) there was no contraction of the corporation's capitalization or its activities, rather both increased; (3) cash on hand and earnings and profits in substantial amounts were available; (4) no real or substantial corporate business purpose was proved.
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Petitioners' preferred stock was redeemed pro rata by their closely held corporation under circumstances in which (1) there was no diminution of their proportionate interest in the corporation; (2) there was no contraction of the corporation's capitalization or its activities, rather both increased; (3) cash on hand and earnings and profits in substantial amounts were available; (4) no real or substantial corporate business purpose was proved. Held, the redemptions were made at such time and in such manner as to be essentially equivalent to the distribution of a taxable dividend under section…
1Opinion of the Court
OPINION.
Fisher, Judge:
Upon the circumstances involved herein, as they appear after a careful consideration of the entire record, we hol'd the distributions received by petitioners in redemption of their preferred stock to be in whole essentially equivalent to the distribution of a taxable dividend1 within the purview of section 115 (g) (1) 2 of the Internal Revenue Code of 1939 and the applicable Treasury regulations.3
Congress has broadly defined the term “dividend” to include “awy distribution made by a corporation to its shareholders” out of earnings and profits. (Emphasis added.) Sec. 115…
2Cases cited16 opinions
- Flanagan v. HelveringCourt of Appeals for the D.C. Circuit · 1940
- Towers v. CommissionerUnited States Tax Court · 1955
- Boyle v. Commissioner of Internal RevenueCourt of Appeals for the Third Circuit · 1951
- Keefe, Collector v. CoteCourt of Appeals for the First Circuit · 1954
- McGuire v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1936
11 more not listed; retrieve them via the Exa API.
3Cited by22 opinions
- Heman v. CommissionerUnited States Tax Court · 1959
- Lewis v. CommissionerUnited States Tax Court · 1960
- Thomas Kerr and Barbara Kerr v. Commissioner of Internal RevenueCourt of Appeals for the Ninth Circuit · 1964
- Kerr v. CommissionerUnited States Tax Court · 1962
- Grubbs v. CommissionerUnited States Tax Court · 1962
17 more not listed; retrieve them via the Exa API.