Dorothy E. Brown and Donald Lee Brown and United States National Bank of Oregon, Etc. v. United States

HUFSTEDLER, Circuit Judge:

The residuary legatees of Clay Brown, deceased, appeal from a judgment of the district court denying their claim to a partial refund of income taxes for 1956. 1 At issue is the tax treatment of two blocks of stock that the decedent acquired pursuant to a stock option plan under the then applicable section 421 of the Internal Revenue Code (26 U.S.C. § 421). 2

On October 28, 1954, Mr. Brown was elected president of M and M Woodworking Company (“M & M”), and shortly thereafter became a director. As a part of the resolution naming him president, Mr. Brown was granted a…