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United States v. Anderson, Clayton & Co., 350 U.S. 55 (1955)

United States v. Anderson, Clayton & Co.

No. 26

Argued October 20, 1955

Decided November 7, 1955

350 U.S. 55


Pursuant to a contract entered into without any shown purpose of advantageous investment, but solely for the purpose of maintaining the distribution of its common stock among responsible and active members of its organization in a manner designed to reflect their worth to it, a corporation purchased the shares of a deceased officer. These shares were not retired, but were retained as treasury stock. While in the treasury, they could not be voted nor counted for the purpose of establish a quorum, nor were dividends paid on them. Subsequently, they were resold at a profit to other officers of the corporation, pursuant to the contract.

Held: in the circumstances of this case, Treasury Regulations 111, § 29.22(a)-15, does not make the sale of this treasury stock of the corporation a taxable transaction under § 22(a) of the Internal Revenue Code of 1939. Pp. 350 U. S. 55-60.

(a) On the record in this case, the corporation was not dealing in its shares as it might in the shares of another corporation, within the meaning of the Regulation. Pp. 350 U. S. 59-60.

(b) A different result is not required by the fact that the shares were not retired and new shares issued. P. 350 U. S. 60.

129 Ct.Cl. 295, 122 F.Supp. 837, affirmed.

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