South Atlantic Steamship Line v. Commissioner

*711OPINION.

Van Fossan:

The first issue for our determination is whether or not new preferred stock of the Fertilizer Co. received by petitioner in accordance with a recapitalization of that company was a dividend taxable to petitioner under section 115 of the Eevenue Act of 1936. Petitioner contends that the change in capital structure of the Fertilizer Co. constituted a reorganization and gain is recognizable on the exchange of the old stock for new stock, bonds, and cash only to *712the extent of the cash received. Respondent argues, however, that the noncumulative preferred stock was received by…