Frances U. Brennan, as of the Last Will and Testament of William J. Brennan, Deceased, Etc. v. A. J. O'donnell, District Director of Internal Revenue

AINSWORTH, Circuit Judge.

The issue presented in this case is whether certain cash advances made by taxpayers to a corporation in which they were shareholders should be considered as creating a class of stock in the corporation for the purpose of determining the corporation’s eligibility to obtain the special tax treatment made available by Subchapter S, Int.Rev.Code of 1954, §§ 1371-1377, to “small business corporations” and their shareholders. If these advances are not to be considered as creating a class of stock in the corporation, as the District Court concluded, the corporation qualified…