Estate of Metcalf v. Commissioner

*237OPINION.

Akundell :

In 1921 the Southern Pacific Co. was the owner of all the capital stock of the Pacific Oil Co. In that year it paid a dividend in the form of a right to purchase stock of the Pacific Oil Co. at the price of $15 per share, which right had a fair market value on the date of its receipt of $18 per share. The value of the rights received by the petitioner should have been returned as an ordinary dividend taxable only at surtax rates. Peabody v. Eisner, 247 U. S. 347. The subsequent sale or other disposition of the property received by way of a dividend would give rise to gain or…