Commissioner of Internal Revenue v. Stone's Estate

GOODRICH, Circuit Judge.

The question in this appeal from the Tax Court is whether the proceeds received from a sale of stock purchase warrants in 1948 are taxable as ordinary income or as a long term capital gain under section 117(a) (1,4) I.R.C., 26 U.S.C. A. 1 The Tax Court decided that the transaction was governed by the capital gains provision, 19 T.C. 872, and the Commissioner appeals.

Lauson Stone was president of the Fol-lansbee Steel Corporation, with a stipulated salary. In 1947, at a shareholders’ meeting, a motion was passed authorizing the corporation to issue and sell to Mr. Stone…