Gokey Properties, Inc. v. Commissioner of Internal Revenue

Second Circuit

Gokey Properties, Inc. v. Commissioner of Internal Revenue

290 F.2d 870, 7 A.F.T.R.2d (RIA) 1514, 1961 U.S. App. LEXIS 4331

CourtCourt of Appeals for the Second Circuit

DecidedJune 1, 1961

Docket26733_1

StatusPublished

Cited by7 cases

This text of 290 F.2d 870 (Gokey Properties, Inc. v. Commissioner of Internal Revenue) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Gokey Properties, Inc. v. Commissioner of Internal Revenue, 290 F.2d 870, 7 A.F.T.R.2d (RIA) 1514, 1961 U.S. App. LEXIS 4331 (2d Cir. 1961).

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Opinion

PER CURIAM.

The Tax Court held that payments by the taxpayer corporation to its stockholders on the corporation’s bonds were nondeductible dividend distributions rather than deductible interest on an indebtedness. We agree with the result reached by the Tax Court and the reasons given in Judge Bruce’s opinion. Gregg Co. of Delaware v. Commissioner, 2 Cir., 1956, 239 F.2d 498. We note a minor error in the Tax Court opinion, 34 T.C. 829, at page 837, where the statement is made that the record discloses no dividend payments on petitioner's stock. There were in fact payments of dividends in the amount of $700 in each of two of the years in question, as shown by the balance sheets of the corporate tax returns. Even in those two years by far the greater portion of petitioner’s earnings were distributed, by vote of the directors, to its stockholders in the guise of bond interest. These token payments of dividends, in the light of the entire earning and dividend history, strengthen rather than weaken the Tax Court’s ultimate conclusion as to the nature of the so-called bonds.

Decision and order of the Tax Court affirmed.

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PER CURIAM.

The Tax Court held that payments by the taxpayer corporation to its stockholders on the corporation’s bonds were nondeductible dividend distributions rather than deductible interest on an indebtedness. We agree with the result reached by the Tax Court and the reasons given in Judge Bruce’s opinion. Gregg Co. of Delaware v. Commissioner, 2 Cir., 1956, 239 F.2d 498. We note a minor error in the Tax Court opinion, 34 T.C. 829, at page 837, where the statement is made that the record discloses no dividend payments on petitioner's stock. There were in fact payments of dividends in the amount of $700 in each of two of the years in question, as shown by the balance sheets of the corporate tax returns. Even in those two years by far the greater portion of petitioner’s earnings were distributed, by vote of the directors, to its stockholders in the guise of bond interest. These token payments of dividends, in the light of the entire earning and dividend history, strengthen rather than weaken the Tax Court’s ultimate conclusion as to the nature of the so-called bonds.

Decision and order of the Tax Court affirmed.

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290 F.2d 870, 7 A.F.T.R.2d (RIA) 1514, 1961 U.S. App. LEXIS 4331, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gokey-properties-inc-v-commissioner-of-internal-revenue-ca2-1961.

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