Elko Lamoille Power Co. v. Commissioner
United States Board of Tax Appeals
1. In the circumstances, held that a certain instrument issued by petitioner and denominated a certificate of preferred stock does not constitute a certificate of indebtedness. 2. Amounts paid to holders of such preferred stock during the taxable years 1926 and 1927 represented the payment of dividends and do not constitute allowable deductions in computing net income.
1Opinion of the Court
*294OPINION.
Matthews:
The sole question presented for consideration is whether the amounts paid to holders of the preferred stock were in fact dividends, or were interest on borrowed money. The circumstances surrounding the transaction have been set out in the findings. It must be determined whether the transaction constituted a loan or an investment in preferred stock.
It is the generally accej)ted rule that the name given to the instrument is not conclusive of its character and that inquiry may be made as to its real character, but it is not lightly to be assumed that parties have given an…
2Cases cited4 opinions
- Warren v. KingSupreme Court of the United States · 1883
- Spencer v. SmithCourt of Appeals for the Eighth Circuit · 1912
- Armstrong v. Union Trust & Savings BankCourt of Appeals for the Ninth Circuit · 1918
- Smith v. Southern Foundry Co.Court of Appeals of Kentucky · 1915
3Cited by5 opinions
- O. P. P. Holding Corp. v. CommissionerUnited States Board of Tax Appeals · 1934
- Proctor Shop, Inc. v. CommissionerUnited States Board of Tax Appeals · 1934
- Bakers' Mut. Co-operative Asso. v. CommissionerUnited States Board of Tax Appeals · 1939
- Elko Lamoille Power Co. v. CommissionerUnited States Board of Tax Appeals · 1930
- Proctor Shop, Inc. v. CommissionerUnited States Board of Tax Appeals · 1934