Crellin's Estate v. Commissioner of Internal Revenue

ORR, Circuit Judge.

Petitioners are stockholders in a California personal holding corporation. During the year 1946 the directors of the holding company declared a dividend of an amount about equal to a capital gain it had realized on the sale of certain of its securities. The directors, in declaring the dividend, were actuated by a belief that the gains, unless distributed, would be subject to the personal holding company surtax. This -belief was based upon the advice of a certified public accountant. Each petitioner received the amount of dividend to which it or she was entitled and…