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PENNSYLVANIA POWER & LIGHT CO. v. UNITED STATES

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA


August 18, 1966

Pennsylvania Power & Light Company
v.
United States of America

Kirkpatrick, District Judge.

The opinion of the court was delivered by: KIRKPATRICK

Sur Pleadings and Proof

KIRKPATRICK, District Judge.

 This is an action to recover income tax in the amount of $259,551.16 paid by the plaintiff for the year 1945. The case has been tried upon a stipulation of agreed facts by the Court sitting without a jury and is now before the Court for final disposition.

 As part of a plan of recapitalization, the plaintiff's stockholders, on December 10, 1945, authorized the redemption of 164,390.38 shares of its preferred stock. The notice of redemption sent to the stockholders stated that the plaintiff called the outstanding preferred stock for redemption on January 9, 1946,*and that the holders of such stock, upon surrender of their shares on any date subsequent to December 10, 1945, would be paid $110.00 per share plus "accrued unpaid dividends" to January 9, 1946.

 On December 10, 1945, the recapitalization of the plaintiff was completed by the plaintiff's deposit of $18,372,477.51 with a trust company for distribution to the holders of the outstanding preferred stock. On that date the money for redemption of the preferred stock was paid in full and, so far as the plaintiff corporation was concerned, every event necessary to constitute a redemption of that stock had occurred. In its income tax return for the year 1945, the plaintiff claimed a dividend paid credit of over $7,000,000. of which claim three items totalling $2,741,616.17 were disallowed by the Commissioner. These items were: (a) $10 per share call premium $1,643,903.80 (b) excess of stated value of preferred over amount re- ceived when such stock was issued 808,176.66 (c) accrued and unpaid dividends for the pe- riod subsequent to October 1, 1945 289,535.71

19660818

© 1992-2004 VersusLaw Inc.



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