Frantz v. Commissioner
United States Tax Court
Petitioner owned 65 percent of the common stock and 13 percent of the preferred stock of a corporation. He surrendered to the corporation his preferred stock and certain advances owing to him from the corporation. The surrender was non pro rata with respect to other shareholders. Petitioner subsequently sold his common stock. Held: Petitioner did not sustain a loss on his surrender to the corporation of his preferred stock and advances.
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Petitioner owned 65 percent of the common stock and 13 percent of the preferred stock of a corporation. He surrendered to the corporation his preferred stock and certain advances owing to him from the corporation. The surrender was non pro rata with respect to other shareholders. Petitioner subsequently sold his common stock. Held: Petitioner did not sustain a loss on his surrender to the corporation of his preferred stock and advances. His surrender constituted a contribution to the capital of the corporation. To the extent that our prior cases hold that a non pro rata surrender of stock to…
1DissentParker, J.
I cannot join the majority opinion insofar as it disallows petitioner’s loss deductions for the stock he surrendered.
In 1929, a majority of the Board of Tax Appeals held that a shareholder who had surrendered some of his shares to the issuing corporation for its benefit had incurred a deductible loss. Wright v. Commissioner, 18 B.T.A. 471 (1929), modified on another issue 47 F.2d 871 (7th Cir. 1931). Until today, this Court had never wavered from its holding that a shareholder’s disproportionate transfer of stock to the issuing corporation or to a third party for the benefit of the…
2Cases cited34 opinions
- Foster v. Comm'rUnited States Tax Court · 1983
- Fox v. CommissionerUnited States Tax Court · 1984
- Smith v. CommissionerUnited States Tax Court · 1982
- Karl F. Knetsch and Eva Fay Knetsch v. The United StatesUnited States Court of Claims · 1965
- Sicanoff Vegetable Oil Corp. v. CommissionerUnited States Tax Court · 1957
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