Legal Opinion · Dissent
Portage Plastics Company, Inc. v. United States
Court of Appeals for the Seventh Circuit
Decided October 19, 1972No. 71-1555Published
1DissentCummings, Circuit Judge
I agree with the lower court (301 F. Supp. 684, 692) that application of the *317traditional thin capitalization doctrine tests1 for determining whether a purported loan should be treated as an equity contribution is not suited to determine whether “more than one class of stock” exists within the meaning of Internal Revenue Code of 1954, § 1371(a) (4).
The thin capitalization doctrine emerged to prevent improper tax avoidance through the use of debt rather than equity. It operates to reclassify as equity that which would otherwise constitute a contribution to capital but for a label of debt…
2Cases cited20 opinions
- Manhattan General Equipment Co. v. Commissioner of Internal RevenueSupreme Court of the United States · 1936
- United States v. Simon W. Henderson, Jr., Independent for the Estate of Louise R. Henderson, DeceasedCourt of Appeals for the Fifth Circuit · 1967
- Gooding Amusement Co. v. CommissionerCourt of Appeals for the Sixth Circuit · 1956
- Montclair, Inc. v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1963
- Commissioner of Internal Revenue v. Gazette Tel. Co.Court of Appeals for the Tenth Circuit · 1954
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