Capital Estates, Inc. v. Commissioner
United States Board of Tax Appeals
1. A corporation proposing to declare a stock dividend sent a notice to shareholders seeming to give each an election to choose stock or cash but adding that, since it had insufficient cash, the dividend would, in the event that cash were chosen, be passed. No shareholder "elected" cash, and the dividend was declared in stock without reference in the resolution to any election.
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1. A corporation proposing to declare a stock dividend sent a notice to shareholders seeming to give each an election to choose stock or cash but adding that, since it had insufficient cash, the dividend would, in the event that cash were chosen, be passed. No shareholder "elected" cash, and the dividend was declared in stock without reference in the resolution to any election. Held, that no election was given; that, under section 115(f)(2), Revenue Act of 1936, the stock dividend was not taxable to the shareholders, and that it did not provide the basis for a dividends paid credit under…
1Opinion of the Court
*989OPINION.
Sternhagen :
1. Petitioner demands a dividends paid credit under Revenue Act of 1986, section 27 (e) ,1 and to that end seeks to establish that the dividend paid by it in January 1937 was not such a nonincome dividend as is covered by section 115 (f) (1),2 but a taxable dividend in the hands of the shareholders, as set forth in section 115 (f) (2) ,3 Although the shareholders are not here, their duty to include the dividend in their income must be determined as the foundation for the petitioner’s case, since its dividends paid credit can only exist if to the shareholders the dividend…
2Cases cited2 opinions
- Eisner v. MacOmberSupreme Court of the United States · 1920
- Gibbons v. MahonSupreme Court of the United States · 1890
3Cited by3 opinions
- Ciba Pharmaceutical Products, Inc. v. CommissionerUnited States Tax Court · 1960
- Capital Estates, Inc. v. CommissionerUnited States Board of Tax Appeals · 1942
- Ciba Pharmaceutical Products, Inc. v. CommissionerUnited States Tax Court · 1960