Northern Refrigerator Line, Inc. v. Commissioner
United States Tax Court
Taxpayer corporation issued certificates, called "preferred stock" certificates, providing for redemption thereof on a definite maturity date, if it could be done without impairment of capital; for specified cumulative annual "dividends," payable quarterly out of net earnings or other funds available for dividends; and for their payment in full upon dissolution of the corporation before any distribution to common stockholders.
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Taxpayer corporation issued certificates, called "preferred stock" certificates, providing for redemption thereof on a definite maturity date, if it could be done without impairment of capital; for specified cumulative annual "dividends," payable quarterly out of net earnings or other funds available for dividends; and for their payment in full upon dissolution of the corporation before any distribution to common stockholders. Payment of dividends and ultimate redemption of the preferred stock were guaranteed by another corporation, holder of taxpayer's common stock. Held, the relationship of…
1Opinion of the Court
OPINION.
KeRN, Judge:
The single question presented for our determination is whether certain payments were payment of “interest * * * on indebtedness” and therefore deductible under section 23 (b) of the Eevenue Act of 1934, or were dividends. This depends entirely upon the character of the relationship between the petitioner and holders of its preferred stock.
The petitioner contends that the relationship was that of debtor and creditor, and that the so-called preferred stock was, in fact, evidence of indebtedness. This contention is based chiefly on the existence of a definite maturity date of…
2Cases cited5 opinions
- Warren v. KingSupreme Court of the United States · 1883
- Armstrong v. Union Trust & Savings BankCourt of Appeals for the Ninth Circuit · 1918
- Coleman v. . FullerSupreme Court of North Carolina · 1890
- Bourne v. Board of SupervisorsSupreme Court of Virginia · 1934
- New Bedford Morris Plan Co. v. HicksSupreme Court of Rhode Island · 1931
3Cited by18 opinions
- Monon Railroad v. CommissionerUnited States Tax Court · 1970
- Country Club Estates, Inc. v. CommissionerUnited States Tax Court · 1954
- Verifine Dairy Products Corp. of Sheboygan v. CommissionerUnited States Tax Court · 1944
- Capitol Indem. Ins. Co. v. CommissionerUnited States Tax Court · 1955
- Hewlett-Packard Co. v. Comm'rUnited States Tax Court · 2012
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