Smith v. Commissioner
United States Tax Court
Under a stock purchase agreement Arthur Smith was unconditionally obligated to purchase the stock held by his father's estate. Also, under the agreement his sister's estate and her heirs had the option to sell their stock to Arthur Smith if they so desired. Held, corporate redemptions of stock held by his father's estate were in satisfaction of Arthur Smith's unconditional personal obligation to purchase the stock and, consequently, resulted in constructive dividends to him.
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Under a stock purchase agreement Arthur Smith was unconditionally obligated to purchase the stock held by his father's estate. Also, under the agreement his sister's estate and her heirs had the option to sell their stock to Arthur Smith if they so desired. Held, corporate redemptions of stock held by his father's estate were in satisfaction of Arthur Smith's unconditional personal obligation to purchase the stock and, consequently, resulted in constructive dividends to him. Held, further, corporate redemptions of the stock held by his sister's estate and her heirs did not result in…
1Opinion of the Court
Dawson, Judge:
In these consolidated cases respondent determined deficiencies of $329,992.55 and $10,672.98 in petitioners’ Federal income tax for the years 1971 and 1972, respectively. The issues for our decision are:(1) Whether petitioner Arthur C. Smith, Jr., received constructive dividends as a result of corporate redemptions of stock for which he had an unconditional obligation to purchase from his father’s estate.(2) Whether petitioner Arthur C. Smith, Jr., received constructive dividends as a result of corporate redemptions of stock owned by his sister’s estate and her children.(3)…
2Cases cited24 opinions
- Wall v. United StatesCourt of Appeals for the Fourth Circuit · 1947
- United States v. DavisSupreme Court of the United States · 1970
- Irving Sachs v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1960
- Howard B. Quinn and Charlotte J. Quinn v. Commissioner of Internal RevenueCourt of Appeals for the Seventh Circuit · 1975
- Sachs v. CommissionerUnited States Tax Court · 1959
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3Cited by43 opinions
- Purcell v. CommissionerUnited States Tax Court · 1986
- Bokum v. CommissionerUnited States Tax Court · 1990
- Jonson v. Comm'rUnited States Tax Court · 2002
- Richard D. Bokum, Ii, Margaret B. Bokum v. Commissioner of Internal RevenueCourt of Appeals for the Eleventh Circuit · 1993
- Yelencsics v. CommissionerUnited States Tax Court · 1980
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