Sprouse v. Commissioner of Internal Revenue

HANEY, Circuit Judge.

Petitioner seeks review of a decision of the Board of Tax Appeals holding that a stock dividend received by him was taxable income.

Sprouse-Reitz Co., Inc., was organized under the laws of Oregon on February 20, 1920. On February 13, 1936, its capital stock, authorized and issued, was as follows :

Class Authorized Issued

$100 par voting common ? 600,000 $ 397,471.25

$100 par non-voting common 1,200,000 819,333.06

$100 par 7% cumulative preferred 200,000 none

Totals $2,000,000 $1,216,804.31

*975Its articles of incorporation contained the following provisions:

“The preferred stock…