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Boyle v. Commissioner of Internal Revenue.

decided: February 27, 1951.

BOYLE
v.
COMMISSIONER OF INTERNAL REVENUE.



Author: Mclaughlin

Before MARIS, MCLAUGHLIN and HASTIE, Circuit Judges.

MCLAUGHLIN, Circuit Judge.

This is a petition to review a decision of the Tax Court holding that payment by a corporation to the taxpayer for a portion of his shares of stock in that concern was, under the facts of the case, essentially equivalent to the distribution of a taxable dividend in accordance with Section 115(g) of the Internal Revenue Code.*fn1

Petitioner, an engineer, is the inventor of a number of inflatable rubber articles including rubber boats and life jackets. In 1929 he organized Air Cruisers, Inc., a Delaware corporation to manufacture and sell such products. That same year the company's authorized capital stock was increased from 10,000 to 15,000 shares of no par value. Of these no more than 10,705 shares were ever issued and outstanding. The stock ownership on dates here material was as follows:

Stockholder Prior to May 11, Dec. 13, Dec. 18, May 16, May After

May 11, 1943 to 1943 to 1943 to 1944 to 18, May

1943 Dec. 13, Dec. 18, May 16, May 18, 1945 to 29,

1943 1943 1944 1945 May 29, 1945

1945

Petitioner 3,095 3,602 300 300 300 300 300

Glover 2,995 3,501 3,501 3, 501 3,501 - -

Tiffany 2,995 3,502 300 300 - - -

H. P. Morris 100 100 100 - - - -

Pelham Bissell 710 - - - ...


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