Gokey Properties, Inc. v. Commissioner of Internal Revenue

The Tax Court held that payments by the taxpayer corporation to its stockholders on the corporation’s bonds were nondeductible dividend distributions rather than deductible interest on an indebtedness. We agree with the result reached by the Tax Court and the reasons given in Judge Bruce’s opinion. Gregg Co. of Delaware v. Commissioner, 2 Cir., 1956, 239 F.2d 498. We note a minor error in the Tax Court opinion, 34 T.C. 829, at page 837, where the statement is made that the record discloses no dividend payments on petitioner's stock. There were in fact payments of dividends in the amount of…