Federation Bank & Trust Co. v. Commissioner

OPINION.

MulROney, Judge:

We will make a short summary of some of the foregoing facts before proceeding with, a discussion of the issues. Petitioner, a banking corporation, was taken over by the Superintendent of Banks of the State of New York in 1931. It was allowed to reopen in 1932 after having submitted and having approved a plan of reorganization which involved the raising of new money and the reduction of deposit liability.

Reduction of deposit liability is the part of the reorganization in which our problem falls. Briefly, a majority of the depositors waived one-third of their deposits…