Paul S. Moloney and Roman Gruber, of the Estate of Dora M. Moloney v. United States of America, (Two Cases)

ENGEL, Circuit Judge.

This tax refund suit in the district court arises from a deficiency assessed by the government against Paul S. Molo-ney and Dora M. Moloney 1 in the amount of $50,771.75 in unpaid income taxes for the year 1952. Taxpayers appeal from a partial summary judgment entered in favor of the government in the amount of $35,000.00, and the government appeals from the judgment in favor of taxpayers for the balance.

The deficiency assessment was based upon the government’s determination that a reduction in the stated capital of The Moloney Company, a corporation, from $50,000 to…