Steel Improv. & Forge Co. v. Commissioner
United States Tax Court
Petitioner, a domestic corporation, entered into a contract to sell its stock in a Canadian subsidiary to another Canadian corporation. Under the sales contract, petitioner could declare itself a dividend of $ 180,000 prior to transfer of the stock, but if a dividend was not declared, the sales price of the stock was not to be increased by an amount in excess of $ 64,000. Held, dividend of $ 116,000 is taxable to petitioner.
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Petitioner, a domestic corporation, entered into a contract to sell its stock in a Canadian subsidiary to another Canadian corporation. Under the sales contract, petitioner could declare itself a dividend of $ 180,000 prior to transfer of the stock, but if a dividend was not declared, the sales price of the stock was not to be increased by an amount in excess of $ 64,000. Held, dividend of $ 116,000 is taxable to petitioner. Held, further, for purposes of determining credit for foreign taxes deemed to have been paid (sec. 131(f)(1), I.R.C. 1939), dividend is considered first to be from…
1Opinion of the Court
OPINION.
Scott, Judge:
Respondent has determined a deficiency in the income tax of petitioner for the fiscal year ended September 30, 1954, in the amount of $33,368.19.
The issues remaining for our decision are: Whether the amount received by petitioner, nominally as a “dividend,” from its wholly owned subsidiary was in legal effect a dividend, or a part of the purchase price paid to petitioner for the sale of its stock, and if a dividend, whether petitioner is entitled to a credit for foreign taxes deemed to have been paid because of the payment of income taxes to Canada by its subsidiary with…
2Cases cited25 opinions
- Edwards v. DouglasSupreme Court of the United States · 1925
- American Chicle Co. v. United StatesSupreme Court of the United States · 1942
- Mason v. RoutzahnSupreme Court of the United States · 1927
- Moore v. CommissionerCourt of Appeals for the Seventh Circuit · 1941
- Rupe Investment Corporation v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1959
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3Cited by32 opinions
- Waterman Steamship Corporation v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1970
- J. E. Casner and Una Casner v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1971
- Waterman S.S. Corp. v. CommissionerUnited States Tax Court · 1968
- H. H. Robertson Co. v. CommissionerUnited States Tax Court · 1972
- West v. CommissionerUnited States Tax Court · 1962
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