Niedermeyer v. Commissioner
United States Tax Court
62 T.C. 280 (1974)
- Written by Robert Cane, JD
Facts
Bernard and Tessie Niedermeyer (plaintiffs) owned 23 percent of the common stock and 125 shares of preferred stock of American Timber & Trading Co., Inc. (American Timber). Bernard Jr. and Walter, two of the Niedermeyers’ five sons, owned 68 percent of the common stock of American Timber. Three of the Niedermeyers’ other sons, Ed, Linus, and Thomas, each owned about 22.3 percent of the common stock of Lents Industries (Lents). The Niedermeyers sold all their common stock of American Timber to Lents. Later, the Niedermeyers contributed their preferred stock to a family foundation. The Niedermeyers claimed the proceeds from selling their American Timber stock as long-term capital gains on their tax return. The commissioner of the Internal Revenue Service (IRS) (defendant) found that the stock-sale transaction was essentially equivalent to a dividend and taxable as ordinary income under Internal Revenue Code (I.R.C.) § 302(a). As a result, the Niedermeyers filed a claim in the United States Tax Court.
Rule of Law
Issue
Holding and Reasoning (Sterrett, J.)
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