Ragland Investment Co. v. Commissioner

OPINION

This case offers for our determination the familiar issue of whether ostensible dividend payments on preferred stock are, in reality, interest on indebtedness. We are, however, presented with a slightly different twist to the usual factual pattern in that the petitioners here are contending for an equity rather than a debt classification in order to qualify for the 85-percent dividends-received deduction prescribed in section 243(a) (l),3 I.R.C. 1954.4 Of course this twist in no way alters the applicable legal principles.

Accordingly, we note ab initio that the dividends received…