Richmond, Fredericksburg and Potomac Railroad Company v. Commissioner of Internal Revenue

HAYNSWORTH, Chief Judge:

The Railroad, issuer of old hybrid securities, sought certain income tax advantages bottomed upon the claim that the securities are bonds. While they have some of the attributes of bonds, they also have attributes of common stock. The Tax Court held that with respect to the transactions involved, the securities should be treated as equity capital. Since the transactions themselves were oriented to those features attributable to common stock, we affirm.

In the last half of the last century, Richmond, Fredericksburg & Potomac Railroad issued several series of hybrid…