Commissioner of Internal Revenue v. Babson

SPARKS, Circuit Judge.

The three appeals involving the Commissioner’s determination of income taxes against the three respondents for the years 1925 and/or 1926 present but one issue: Do certain payments made by Babson Brothers, a corporation, to the respondents in 1925 and 1926, for the reduction of capital stoek of the corporation, constitute ordinary dividend payments and hence subject to sur-tax rates, or do those payments constitute distribution in partial liquidation of the corporation, subject to taxation only to the extent of the profit reflected therein?

Babson Brothers, an Illinois…