Paul M. Davis and Augusta S. Davis v. United States

STEWART, Circuit Judge.

In 1951 the appellant Paul M. Davis received a cash payment of approximately $12,000 from Continental Bus System, Inc. The question for decision is whether this payment was taxable to the appellants as a long-term capital gain, as they contend, or was ordinary income, as the district court found. The answer depends upon whether the payment consti tuted “boot” under Section 112(c) (1) of the Internal Revenue Code of 1939. 1

The facts are undisputed. In 1947 Mr. Davis was a stockholder in Continental Bus System, Inc. That year Continental’s stockholders made agreements…