The United Gas Improvement Company v. Commissioner of Internal Revenue

MARIS, Circuit Judge.

This case poses the question whether sums advanced by the taxpayer to a controlled subsidiary corporation over a period of years pursuant to the taxpayer’s assumption of another's guarantee of the subsidiary’s preferred stock dividends were to be regarded as further payments on the purchase price of the common stock of the subsidiary which the taxpayer had previously acquired. The same question is raised with respect to an additional payment made by the taxpayer for a release from future liability on the guarantee. The Tax Court held that these payments were all to be so…