McGinty v. Commissioner
United States Tax Court
T, minority stockholder of B Corp., contracted to purchase all the remaining outstanding stock of B Corp. The purchase, in 1950, was financed by a loan which was formally made by B Corp. to T's wife. The proceeds of the loan were turned over to the sellers who endorsed the shares to T. In 1954, when T was the sole stockholder, T surrendered the shares thus purchased to B Corp. for redemption in exchange for B Corp.'s cancellation of the note.
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T, minority stockholder of B Corp., contracted to purchase all the remaining outstanding stock of B Corp. The purchase, in 1950, was financed by a loan which was formally made by B Corp. to T's wife. The proceeds of the loan were turned over to the sellers who endorsed the shares to T. In 1954, when T was the sole stockholder, T surrendered the shares thus purchased to B Corp. for redemption in exchange for B Corp.'s cancellation of the note. Held, the discharge of the note in consideration for the shares surrendered was "essentially equivalent to a dividend" ( sec. 302(b), I.R.C. 1954), and…
1Opinion of the Court
OPINION.
Raum, Judge:
We hold that Berkshire’s 1954 redemption of petitioner’s 1,333% shares of its stock in consideration of the discharge of the $40,000 note held by it was “essentially equivalent to a dividend” within the meaning of section 302 (b) of the 1954 Code.1 Pertinent statutoiy provisions are set forth in the margin.2 The fact that petitioner’s -wife was the maker of the note is of no consequence here. She was plainly acting upon his behalf, and there is no contention to the contrary.
In substance petitioner, a minority stockholder in 1950, offered to purchase all the remaining…
2Cases cited19 opinions
- Wall v. United StatesCourt of Appeals for the Fourth Circuit · 1947
- Joseph R. Holsey and Eleanor T. Holsey v. Commissioner of Internal RevenueCourt of Appeals for the Third Circuit · 1958
- Zenz v. QuinlivanCourt of Appeals for the Sixth Circuit · 1954
- Elizabeth N. B. Ferro v. Commissioner of Internal RevenueCourt of Appeals for the Third Circuit · 1957
- Heman v. CommissionerUnited States Tax Court · 1959
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3Cited by16 opinions
- Benjamin v. CommissionerUnited States Tax Court · 1976
- James M. Pierce Corp. v. CommissionerUnited States Tax Court · 1962
- Bennett v. CommissionerUnited States Tax Court · 1972
- Estate of Runnels v. CommissionerUnited States Tax Court · 1970
- Bunton v. CommissionerUnited States Tax Court · 1968
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