Ft. Pitt Invest Co. v. Commissioner

Board of Tax Appeals

Ft. Pitt Invest Co. v. Commissioner

45 B.T.A. 330, 1941 BTA LEXIS 1139

CourtUnited States Board of Tax Appeals

DecidedOctober 10, 1941

DocketDocket No. 103829.

StatusPublished

Cited by1 cases

This text of 45 B.T.A. 330 (Ft. Pitt Invest Co. v. Commissioner) is published on Counsel Stack Legal Research, covering United States Board of Tax Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Ft. Pitt Invest Co. v. Commissioner, 45 B.T.A. 330, 1941 BTA LEXIS 1139 (bta 1941).

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Opinion

[332]*332OPINION.

Van Fossan :

On the facts as stipulated we sustain the respondent. The parties agree that no dividend was declared or paid by the petitioner during the taxable year, and that no portion of the corporation’s earnings was credited to the individual stockholders. It can scarcely be argued in the face of these facts that there was a constructive declaration or payment or any other action sufficient to satisfy the statute.¹ The fact that the stockholders returned for taxation their proportionate shares of the earnings of the corporation and were not held liable for surtax under section 351 is not enough. The corporation, and not the stockholders, is the taxpayer presently before us. The statement in section 351 (d) that “any amount so included in the gross income of a shareholder shall be treated as a dividend received” does not carry the corollary that the corporation shall be entitled to a dividends paid credit.

The resolution authorizing the auditor to prorate the net income between the two stockholders did not purport to authorize payment of a dividend and in fact no payment was made. The fact that the petitioner was able to pay a dividend is, in these circumstances, immaterial.

The case of Valley Lumber Co. of Lodi, 43 B. T. A. 423, on which petitioner relies, is very different in its facts. There the dividends were declared and credited and, though not withdrawn, were subject to the demand and control of the stockholders. See Hustad Co., 43 B. T. A. 446, where dividends paid credit was denied under facts much more favorable to petitioner than those here present.

Decision will be entered for the respondent.

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[332]*332OPINION.

Van Fossan :

On the facts as stipulated we sustain the respondent. The parties agree that no dividend was declared or paid by the petitioner during the taxable year, and that no portion of the corporation’s earnings was credited to the individual stockholders. It can scarcely be argued in the face of these facts that there was a constructive declaration or payment or any other action sufficient to satisfy the statute.¹ The fact that the stockholders returned for taxation their proportionate shares of the earnings of the corporation and were not held liable for surtax under section 351 is not enough. The corporation, and not the stockholders, is the taxpayer presently before us. The statement in section 351 (d) that “any amount so included in the gross income of a shareholder shall be treated as a dividend received” does not carry the corollary that the corporation shall be entitled to a dividends paid credit.

The resolution authorizing the auditor to prorate the net income between the two stockholders did not purport to authorize payment of a dividend and in fact no payment was made. The fact that the petitioner was able to pay a dividend is, in these circumstances, immaterial.

The case of Valley Lumber Co. of Lodi, 43 B. T. A. 423, on which petitioner relies, is very different in its facts. There the dividends were declared and credited and, though not withdrawn, were subject to the demand and control of the stockholders. See Hustad Co., 43 B. T. A. 446, where dividends paid credit was denied under facts much more favorable to petitioner than those here present.

Decision will be entered for the respondent.

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45 B.T.A. 330, 1941 BTA LEXIS 1139, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ft-pitt-invest-co-v-commissioner-bta-1941.

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