Commissioner v. Ahlborn

BUFFINGTON, Circuit Judge.

In this case it appears the American Bronze Powder Manufacturing Company was a closed corporation held by three persons. William A. Smith, one of the three, held 12 per cent, of the stock and desired to sell, but consent was denied. As the company had $100,000 in liquid assets, it was, by proper corporate action, determined that the capital stock be reduced by $100,000 and that the company buy one-third of the shares of each shareholder and pay therefor in cash or securities. The Tax Board found and held: “That this redemption of stock in 1927 is not one coming within the provisions of section 201 (g) of the Revenue Act of 1926 (26 USCA § 932 (g). Pearl B. Brown, 26 B. T. A. 901; Annie Watts Hill, 27 B. T. A. 73; Henry B. Babson, 27 B. T. A. 859; Shelby H. Curlee, 28 B. T. A. 773.”

With that finding and conclusion we find ourselves in accord, as do we also with the finding and conclusion of the Board, viz.: “Upon careful consideration of all the evidence we are of the opinion that the capital stock of the American Bronze Powder Manufacturing Company had a fair market value on March 1, 1913, of not less than $193,857.07 and that the profit as computed by the taxpayer on the proceeds of the redemption of one-third of his stock in 1927 was correct.”

So holding, the appeal of the Commissioner is dismissed and the order of the Board approved.