Founders General Corp. v. Commissioner of Internal Revenue

I was in the court which decided Commissioner of Internal Revenue v. General Gas & Electric Corporation (C. C. A.) 72 F.(2d) 364, and in spite of later doubts I will adhere to it, but I cannot see any valid distinction between shares of a parent bought from and sold to outsiders by a subsidiary, and those issued by the parent directly to the subsidiary and sold later on the market. When a company issues shares, it makes the holder a member of the group of shareholders; when it buys them, this member retires from the group and takes his share of the assets. Assuming that he gets no more than…