Natwick v. Commissioner
United States Board of Tax Appeals
Petitioner, the owner of 2,914 shares of stock of a corporation having 3,000 shares outstanding, regularly drew from the corporation sums of money amounting altogether, in 1929, to $66,679.22. The corporation had made a profit each year since its incorporation and had amassed a considerable surplus, but only two cash dividends had been declared. Similar withdrawals by petitioner in 1930 were treated as "informal" dividends and taxed as such.
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Petitioner, the owner of 2,914 shares of stock of a corporation having 3,000 shares outstanding, regularly drew from the corporation sums of money amounting altogether, in 1929, to $66,679.22. The corporation had made a profit each year since its incorporation and had amassed a considerable surplus, but only two cash dividends had been declared. Similar withdrawals by petitioner in 1930 were treated as "informal" dividends and taxed as such. A note dated December 31, 1929, was given by petitioner to the corporation in the sum of $66,679.22, the amount of his withdrawal account on that date.…
1Opinion of the Court
*871OPINION.
Kern:
The present proceeding arises on respondent’s determination of a deficiency of $14,051.27 in petitioner’s income tax for the year 1932, and involves the single question of whether the cancellation of a debt of $66,679.22 owed the corporation by the petitioner in exchange for his surrender of 843 shares of the company’s stock constituted a transaction “essentially equivalent to the distribution of a taxable dividend”, within the meaning of section 115 of the Revenue Act of 1932, the relevant provisions of which are set out in the margin.1 As the price at which the stock was…
2Cases cited1 opinion
- Eisner v. MacOmberSupreme Court of the United States · 1920
3Cited by21 opinions
- Flanagan v. HelveringCourt of Appeals for the D.C. Circuit · 1940
- Anna I. Woodworth v. Commissioner of Internal RevenueCourt of Appeals for the Sixth Circuit · 1955
- Pullman, Inc. v. CommissionerUnited States Tax Court · 1947
- John L. Hawkinson and Laura W. Hawkinson, Husband and Wife v. Commissioner of Internal RevenueCourt of Appeals for the Second Circuit · 1956
- McGinty v. CommissionerUnited States Tax Court · 1962
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