Himmel v. Commissioner
United States Court of Appeals for the Second Circuit
338 F.2d 815 (1964)
- Written by Heather Ryfa, JD
Facts
Isidore Himmel (plaintiff) was a creditor of H. A. Leed Company (company), which had two shareholders who each owned 32 shares of common stock. The company underwent a recapitalization and issued 266 shares of Class A nonvoting preferred stock and 110 shares of Class B voting preferred stock to Himmel in exchange for cancellation of the debt. The company decided to redeem the preferred stock several years later. The company redeemed 50 shares of Class A in 1957 and 70 Class A shares in 1958; Himmel agreed to waive all accrued unpaid dividends on the redeemed shares. At the times of the redemptions, the company had retained earnings and profits in excess of the redemption prices. Himmel did not report these transactions on his tax returns. The commissioner of the Internal Revenue Service (defendant) assessed these amounts as dividends. Himmel appealed to the United States Tax Court, which ruled in favor of the commissioner. Himmel then appealed to the United States Court of Appeals for the Second Circuit.
Rule of Law
Issue
Holding and Reasoning (Moore, J.)
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