R. J. Reynolds Tobacco Co. v. Commissioner
United States Board of Tax Appeals
Over a period of several years, in pursuance of its policy of broadening its stockholding base, protecting its stock and business and to support the market, petitioner corporation bought shares of its own stock for cash on the open market and later sold certain of the shares so acquired. The stock was not retired but was held as treasury stock and carried in its investment account. During the taxable year 1929 petitioner so bought 574,000 shares.
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Over a period of several years, in pursuance of its policy of broadening its stockholding base, protecting its stock and business and to support the market, petitioner corporation bought shares of its own stock for cash on the open market and later sold certain of the shares so acquired. The stock was not retired but was held as treasury stock and carried in its investment account. During the taxable year 1929 petitioner so bought 574,000 shares. Also during the taxable year petitioner sold 194,000 shares of its own stock acquired during 1929, and 15,000 shares previously acquired. These…
1Opinion of the Court
*956OPINION.
Van Fossan:
The sole issue in this case is whether petitioner by purchasing shares of its own stock, for cash, and later canceling the certificates and selling and issuing new certificates representing such shares for cash, realized a taxable gain. The amount of gain, the acquisitions and dispositions by petitioner of its own stock, the cost and sale prices thereof, and all other material facts are undisputed. There is only the question of law, whether the profit on the several transactions, $436,581.21, is taxable income. By stipulation of the parties this sum is reduced to…
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