Beard v. Commissioner
United States Tax Court
Where an individual owner of preferred shares of a corporation, L, all the common shares of which are owned by another corporation, C, being advised that his shares will soon be redeemed by L and that C offers to buy his shares before the forthcoming redemption, of his own volition sells his shares to C and later the shares, when owned by C, are redeemed by L, held, the gain of the individual is taxable to him as a long term capital gain from sale and not as an ordinary…
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Where an individual owner of preferred shares of a corporation, L, all the common shares of which are owned by another corporation, C, being advised that his shares will soon be redeemed by L and that C offers to buy his shares before the forthcoming redemption, of his own volition sells his shares to C and later the shares, when owned by C, are redeemed by L, held, the gain of the individual is taxable to him as a long term capital gain from sale and not as an ordinary gain, as it would have been if he had held the shares until the redemption by L.
1Opinion of the Court
OPINION.
Sternhagen, Judge'.
The taxpayer on October 25, 1939, sold his 1,379 shares of Laboratories stock to Cyanamid for $25,949.41. Because of the circumstances preceding the sale, from which it is clear that Cyanamid knew that its purchase of the Laboratories shares of any shareholder would have the effect of a lower tax upon the shareholder than if the shares were redeemed by Laboratories while owned by him, the Commissioner argues that the amount received by the shareholder should be treated not as sale price, but as if it were the redemption price which Laboratories would have paid him…
2Cases cited4 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- Higgins v. SmithSupreme Court of the United States · 1940
- Hobby v. CommissionerUnited States Tax Court · 1943
- Allport v. CommissionerUnited States Tax Court · 1944
3Cited by27 opinions
- Apt v. BirminghamDistrict Court, N.D. Iowa · 1950
- Gray v. CommissionerUnited States Tax Court · 1971
- Paine v. CommissionerUnited States Tax Court · 1954
- Seminole Flavor Co. v. CommissionerUnited States Tax Court · 1945
- ASAT, Inc. v. CommissionerUnited States Tax Court · 1997
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