Arthur R. Jones Syndicate v. Commissioner

*865OPINION.

Smith:

The question involved in this proceeding is whether the payments to F. C. Austin upon his first preferred shares' were in fact distributions of profits to a shareholder or payments of interest on indebtedness. If the latter, they are deductible from gross income; if the former, they are not.

An inspection of the syndicate agreement shows that the certificates of interest held by Austin are throughout the instrument designated as “ shares.” These shares were subject to redemption, as a whole, on July 1,1922, “ by payment of the par value thereof plus *866dividend at the rate of…