*1 controlling testimony. its making In other words was of “a of law.” controlling question of law my its trial record for the Interfer- view the proceedings. interpretation It was therefore en- here is the of 35 U.S.C. § ence my view, statute, Fur- under the raised. titled not the other matters' urged production thermore, for intro- documents because it was express appeal, duction evidence or for the I no view basis into examining type order could be witnesses. to whether this appeal considered to be a final order contrary think, majority, I purposes. language by majority quoted even the (5th Weisz, from F.2d 464 Gladrow v. 1965) talk-

Cir. shows that the court was about the use of Rules solely production in connection with making Inter-

use in the record for the proceedings.

ference said that court Rule 34 could be used to obtain documents BYRD, Lou Jimmie ESTATE of Otis E. required for examination or cross-exam- Petitioner, Administratrix, Byrd, agree. ination a witness. I But v. say production is not INTERNAL REV- OF COMMISSIONER evidentiary be tested standards. Respondent. ENUE, my re- view the case reached the Gladrow No. 24135. I (7th sult which I think is dictated here. do Appeals States Court United Zletz, not read Natta 379 F.2d 615 Circuit. Fifth 1967) contrary. Indeed, had Cir. to the Dec. district court determined here that production measured was to be evi- Rehearing En Banc Denied dentiary discovery than standards rather March interpre- quarrel I would have no with tation statute. Finally, contrary implication majority opinion, I cannot find that

wé are concerned proce- issue of

dural process. or substantive due governing

breadth of even-handed rules production does evidence not raise

a constitutional issue this context. any personal

Nor do I preference think desirability

as to discovery of full

here involved. The matter is one for Con- gress treat, desires, if it after full con- problem.

sideration of the express

I opinion particular no on the

discovery rulings the district court I because think this court lacks jurisdiction interlocutory ap- under the (28 peal 1292(b)) statute U.S.C. Indeed,

view them. I do not think the allowing appeal

order can con-

strued to have authorized the submission

of such issues. The same is true of the say appellant.

other issues raised I pertinent portion

this because the only permits interlocutory statute review *2 Wagnon, Jr., Bradley,

Macbeth Lee C. Jr., Ala., Birmingham, petitioner. for Rogovin, Atty. Gen., Mitchell Asst. Harry Marselli, Lee A. Jackson, David Walter, Willan, O. M. Robert Grant W. Wiprud, Smith, Attys., Dept, Stuart A. Justice, Uretz, R. Lester Chief Coun- sel, I.R.S., Christopher Ray, Atty., J. R.S., Washington, C., respond- D. for ent. BROWN, Judge, Before Chief AINS- Judge, SUTTLE, Circuit

WORTH, Judge. District Judge: BROWN, JOHN R. Chief appeal presents a novel in the field question income taxation. whether, qualify stock exchange that will 303,1 treatment under 26 U. imposed 1. “SEC. 303. IN RE such decedent’s DISTRIBUTIONS because death, DEMPTION OF STOCK TO PAY “(2) DEATH TAXES. of funeral and the amount ad- general. “(a) expenses distribution ministration allowable as de- —A ” to a shareholder ductions to the estate part tion in all shall treated as a distribution full (for stock of such for the stock so purposes) estate tax included deemed. “(b) Limitations estate of a dece- dent, (a).— to the extent the amount subsection “(1) such distribution does not exceed Period distribution “(2) Relationship sum of— stock to dece- “(1) estate, inheritance, legacy, dent's estate.— (including general. “(A) succession taxes —Subsection taxes) terest collected as of such to a distribution a cor- were taxable as include not can S.C.A. § again Proving directly him in the affirm. dividends. We stock owned results, redeeming tax world weird sometimes also. States, indirectly by Tandy him Leather Co. v. United value of stock (concurring F.2d through corporation which owns another taxpayer opinion), first shares *3 attribution, cf. denied the benefit Belatedly asserted Phinney Co., Tuboscope redemp the further contention that 268 F.2d while second exchange qualifies treatment tion gets it. Government equiva essentially “not 3023 as facts, fully stipulated, can be Court, up lent to a dividend.” The Tax quickly presented with the aid Commissioner, holding determined Estate of Otis E. 2. set out for analysis. Byrd, (1), but other termining viving spouse’s treated as corporation. decedent’s spouse cedent’s cent of two or more ceding sentence, shall be treated as the stock of spect to each of which there is included value of the gross estate.” or more taxable of the 35 quirements poration dent, or of such estate tax dent’s “(i) “(B) “(ii) determining provision determining per Administratix. more than 35 Special estate of such value of the more than 50 cent corporation decedent per the value of community property purposes) having death, represents estate is either— here relied on is For the parts if cent and 50 subparagraph (A), estate more than 75 interest in rule the value of the dece- the value of the the value corporations, stock been included in de- estate Byrd, and the outstanding which is included of reference and decedent. per —For per all of which, at stock 302 are also Jimmie (for per cent cent of the such decedent’s surviving purposes with re- cent shall stock, single stock stock dece- pre- sur- Lou tivo per de- be treated as a distribution does fact vided subchapter, tions of “(d) $ stock. section 318 “(4j lent “(c) “(5) termining “(2) demption terest— “(1) es.— “(b) “(3) dividends.—Subsection (b)), Except “(1) $ (4) $ requirements redemption requirements section. Constructive Substantially to a Termination of that such or full Application Stock Redemptions in certain Redemptions Redemptions (within ^ section 301 shall not paragraph (2) property.— apply, if dividend. as otherwise whether a $ (a) subsection if a issued general. Except stock—(cid:127) shall such is not reorganizations— corporation meaning be taken into applies. oionership stock for ^[*] disproportionate treated as treated paragraphs. — paragraph (2), paragraph (1), * * essentially redemption railroad shareholder's (a) provided equivalent of this section of section 317 fails shall $ as distribu- * purposes property to redeems subsection, exchang- —In stock.— account. to meet apply in this equiva- meets * * pro- (3), de- in- re- if “(e) Cross references.— “SEC. 302. RE- DISTRIBUTIONS IN redemp- special relating DEMPTION OF STOCK tion— “(a) General rule. pay (1) stock to Death Taxes.—Of taxes, If a redeems its death see section (within 317(b)), meaning (2) section 306 of section Section 306 Stock.—Of paragraph stock, (1), (2), (3), and if see section partial redemp- Liquidations. applies, (b) of subsection —Of complete liquidation, section 331.” tion shall be treated as a distribution see schedule4 ^[1] [2], etc. in which bracketed have been inserted numbers for ease of reference. owning substantial Otis Byrd controlling died *4 No. 24135-Byrd v. Commissioner 303, “Redemptions

terests, ([4], [5], [6],) directly and in- under deemed Pay directly ([7], [8]), Taxes.” The Commissioner in four Death disagreed, deficiency Peoples corporation, and assessed The one assets of ground Savings, primarily (but not ex- failed consisted qualify clusively) under three treatment of stock Banking, there- corporations either 302 or 303 and that Hub —Alabama proceeds [8]). City, (see fore the were to be treated as Rock Finance [7], Confining dividends decedent owned 88.9% taxpayer’s Peoples Savings. valuing consideration conten- the dece- estate,5 petition8 was included dent’s Commissioner, agreed. Byrd only T.C. of the stock (1966). By directly by for reconsidera- motion the decedent the redeem- petition tion corporations, and motions to amend but also sought reopen record, Taxpayer decedent’s stock of 88.9% Savings. to raise 302 contention that Peoples the § equiv- essentially were “not the stock owned di- dividend,” alent a hear- to a but after rectly by in three of the decedent ing, these motions were denied. Banking, Hub —Alabama City, redeemed and Rock Finance —was I. $88,900 [12], same amount initially presented to issue *5 purposes. which it was valued estate for (see by the Tax and determined redemption for the of was supra) note 7 whether the distribu- was discharge providing with which to funds by the estate on the tions received expenses6 certain estate excess demption qualified under stock § $100,000. treatment in ex- for as distributions that, change stock, failing In the estate’s income tax for un- return for the or year ending turn, the taxable December der 301 as dividends. This § 1959, Taxpayer proceeds depends upon the for treated whether satisfying the in full distributions the 75% payment exchange (b) (B), stock re- the and therefore the 35% figures

5. The are: percentage values 35% 50% $728,624.85 $255,018.70 Value estate $314,512.19 $157,256 Taxable estate expenses specified: following were 86,343.90 Federal Estate Tax $ 5,984.39 Alabama Estate Tax Funeral and Administration Expense 8,615.80

$100,944.09 expenses qualify 303(a). The Government does not contest that these under § Adjustment “Explanation 8. The Tax Court noted that the Commis- “(a) you It is determined that realized sioner had that “also determined such $88,900 qualify dividend income the amount of did not distribu- distributions by exchange the listed be- tions in full contemplation low. It is further determined that such the stock within the requirements Code, did not meet the 302 of and that therefore § of section 302 303 of the Internal constituted dividends. These and/or Accordingly, Revenue tax- [Commis- Code of 1954. latter determinations the by put able income is amount sioner] the have not been in issue.” increased $88,900. Section 301 of the Internal Revenue Code of 1954.” though requirements (A) by Peoples Savings, owned § 50% (see supra) Taxpayer redeeming corporations note 1 include can stock lit- directly erally stock was “included in redeeming the decedent value of owned decedent’s estate * * can) (which concededly he This is because decedents’ so indirectly Peoples Savings ownership also the value of stock was 88.9% solely by owned the decedent in the redeem- determined reference to the ing corporations through ownership underlying value of assets—the Savings. Peoples The Government it owned agrees can include that if tions. indirectly value of owned Ownership a. Constructive Under 318 § redeeming corporations, then the appeal, Taxpayer pri On relies percentage requirements be of 303 will § marily applicability on the 303 of qualify met and the distributions would rules of constructive treatment. Although 26 U.S.C.A. 318.9 support expressly contention that the cross-reference10 indirectly 303, Taxpayer taken into account, Taxpayer strenuously argues ar- asserts two basic neither that was guments. urges First, Taxpayer legislative oversight expression nor an Congressional rules intent that the attribution by Peoples Quite apply. the stock owned should not the con Savings redeeming corporations urges provision trary, that such ples of his schedule fy *6 Second, relying tributable is more than sufficient (b) (2) (B), Taxpayer attributed to decedent to Savings. percentage requirements proportionate ownership ^[11] and note 5 on the Such ownership, wording urges supra) the extent that of 303. of 303 if at- § satis- even Peo- (see ment ceptions, levies fluous. This is its inclusion would have been deemed (b), statutory runs, unnecessary by also some of them found tax, including scheme. statutory provision so 302(d), from an Congress, Thus, § has analysis certain in indeed super § argu ex at- (3) 306(b) (A) (relating 9. (1) “Sec. 318. Constructive section to disposition stock); of section 306 (4) “(a) 334(b) (3) (C) (relating General rule.— section to property liq- basis of received in certain provisions For those subsidiaries); uidations of subchapter this to which the rules con- (5) 382(a) spe- (3) (relating section to expressly tained in this section are made operating * * * cial limitations on net loss applicable— carryovers); “(2) Partnerships, estates, trusts, and (6) 856(d) (relating section to defini- corporations.— tion of rents from real in the Corporations. per- “(C) Prom 50—If trust); of real case estate investment cent or more in value of in the stock a (7) (b) (relating section 958 to construc- owned, directly or indirect- respect tive rules with to con- ly, by any person, person or for such foreign corporations); trolled owning owned, be considered as (8) 6038(d) (1) (relating section to directly indirectly, by or for cor- respect foreign formation to certain poration, proportion in that which the corporations).” person of the stock so which such Thus, (see pro- supra) § 318 note 9 10. owns bears to the of all the stock only at vides the outset for its corporation. in such provisions subchapter to “those of “(b) Cross references.— to which the rules in this contained sec- provisions For to which the rules con- expressly applicable tion are * * made (a) apply, in tained subsection see— 318(b) followed in cross- (1) (relating section 302 to “provisions references to the to which stock); ap- the rules contained in subsection * * (2) (relating section 304 to There is no cross-refer- ply corporations); related ence to precluding expressly time then-ex 318 are same some tribution isting These methods of tax avoidance. cross-reference expression through 302(c). Consequent- objectives provi to find ly, e., question. As a tax relief rules —i. the attribution same sions fixing applied provision, are first to rules —which was added applied scope levy must the Revenue Act of 1950. of the also be Code excep- ascertaining scope primarily all estates consisted pur levy, business, which includes a pose dis was to enable estate to examination, only A not of the careful obligations charge hav certain without wording provisions of the dispose family to interest legislative important of but more their Congress explicit But business. Taxpayer’s history, us ar that convinces under which that “the circumstances gument ap that 318 attribution should narrowly de such relief available ply (B) pre cannot fined and situations will restrict relief to legislative vail. of the revisions hardship which true exists.”12 “corporate relating 1954 Code sections considering revisions adjustments” repre Code, Congress held that the view “complete structural overhaul” sented existing provision inadequate revisions, existing law.11 these Congress sought clarify needed.13 exist that further liberalization was ing law, therefore, provisions changes14 made, but also to liberalize of the One at tax relief where warranted while provision, add a was to now § Adm.News, Cong. suring 11. 1954 U.S.Code & that stock of certain Cong., Sess., p. pay 83rd 2nd free be retained to death taxes liability. treatment dividend brought the attention “It has been pre- your policy furthers committee’s problem your of financing committee family-held venting the forced sale of the estate tax acute enterprises large corporate businesses solely consisting largely of estates case of impact because the combined family corporation. mar- shares Experience and income taxes. estate since enactment of the usually very limit- such shares is ket for ed, existing provisions frequently difficult, and it is if proven hardship may still exist has because dispose minority impossible, inter- unduly nature restrictive If, therefore, tax cannot est. the estate operations provision”. through the of the other be financed sale Cong. Adm.News, 83rd 1954 U.S.Code estate, will be assets executors Sess., pp. Cong., 2d 4061-62. dispose family business. forced *7 changes are set out 14. This and the many ab- In cases the result will be the report Finance Com- the of the Senate sorption family enterprise by larger mittee. competitors, tending accentuate thus provisions “Your committee retains the industry degree of concentration of existing allowing law to be re- stock country. in this pay death taxes without divi- deemed to statutory prin- “This extension of consequences. bill dend Your committee’s existing ciple contained income provisions those House includes of the regulations provide tax will effective an application bill which would broaden the financing method of Thus, stock to of this section. it allows primarily tax an estate when consists where constitutes be redeemed closely business, stock in a eliminating thus held eases, percent es- the value of 35 in most the need percent also if it tate but 50 constitutes family’s disposing of the interest Thus, the value of the net estate. business. On the other hand the circum- tax marital deduction allowed for estate under which relief stances avail- is preclude availability purposes will not narrowly re- able are defined and will special provision. As of this strict relief to which true situations provision bill, also House under the hardship exists.” (1) includes funeral administration and Report 208, on § Senate Act of Revenue expenses purposes for as one of the 1950, 1950-2 OB 427-28. redeemed, (2) ex- which stock days retained and “Your committee has the time tends 13. provisions existing broadened con- of law after a decision (B), which would two there are allow cross-references § corporations more if more to be redeemed there is none to §§ § percent15 than standing out in value of the sections which it is Moreover, those corporation applicable,17 specific provi- stock of each was made there is ap- included estate. sion that decedent’s 318 shall terms § Taxpayer argues leg expressed ply. Again, that this there in 303. is none § 'liberalizing purpose islative these Taxpayer goes too far in characteriz- changes require conclusion that Con ing an the relief afforded 303 as § gress did owner intend constructive “exception” levy provision to the of 302§ ship apply pres rules of 318 to § (d). recognize fails to that § provide ent factual situation in order to self-contained, provision independent is a relief. contemplating relief in a the Code 318, however, the enactment specified, if § narrow situation Congress objective had in satisfied, mind an dif- from transaction removes ferent from that of 303. Section consequences of 301. dividend making appearance its first availability the 1954 relief of 303 Code corporate insofar way upon provi- dependent in no concerned,16 were important, was sions of think it We primarily enacted prevent that, history therefore, legislative as a device to Congress tax sought avoidance. enacted, provisions finally of these articulate, precision (see analysis note there is no mention in the supra), the circumstances in which 303 that the rules of constructive own- ownership trust, person, analysis one ership apply. Nor in the corporation, etc., purpose would for the 318 is that the mention provisions to which 318 “ex- attribution rules should pressly applicable” made provision be attributed relief 303. The liberaliz- person. to another ap- ing This selective effect of the amendment in § plicability accomplished (B) contemplated in subsec- the situation (b) tion where the sections to which the where there were “two or more” rules apply ownership intended, would held Had it so specifically Congress were easily set out. While could have extended Adm.Ne.ws, why Mertens makes this vorable terms.” more cerning in the decedent’s ditional than port before the stock of two or more it is not come be included in the decedent’s S.Rep. 1622, the decedent that 75 permission 303 should not be construed as munity property States.” stock of each the 75 the may against final, legislative history percent is evident percent the estate provision expressed redemption provisions be reflects for 83rd percent used estates of decedents in com- to be an in Cong. Mertens, value investment to be redeemed if more to meet the view of redeemed tax allows analysis. U.S.Code prevent figure estate with an ad- 2d Sess. of the liability the fails to disclose Committee the basic tests Law of Fed- the outstand- was chosen. gross on such fa- portfolio discrimina- stock must is included “Although Cong. p. Congress granting under § has estate Re- be- 17. See in the area of specifically cise uncertainties the sections through appropriate.” adjustments. As to such other at attribution clouded with 1954 U.S.Code of stances tion ecutive eral Income Cong., 2d “Section “While present provided ownership. one rules e.g., existing person under which section :3 no statutory Sess., p. for attribution (1964). ^[318] specific statutory guidance Taxation, uncertainty 302(c) by to which section person. *8 corporate of Cong. shall for Your committee providing law [318], existing a result articulates of rules rules for constructive and for stock ownership in certain Code * to remove these Adm.News, by law the ** in where this is 304(c) of attribution reason of ex- be attributed Commentary the the circum- has become administra- ^[318] provided of stock bill intends, areas, (2). 83rd pre- advantage by allowing Taxpayer supported by conclusion a the also lief is comparison Code rules 303 with another closely providing section amounts of the relief where substantial 318 where redeeming corporations held are involved. Section the 6166,19 corporation ex by Tax- an which U.S.C.A. allows held another payment do.18 payer it did not tension of time for of es controlled. But this again largely closely Congress considered the in held busi- in of interest underlying pur- ness §of per- permitted.— “(a) pose reiterated seems Extension closely in- in If the of an interest a factual situation value tinent in deter- held business which is included volved. mining gross corporation aof redeems estate a decedent “When a stock, many (at death) in circumstanc- his a who was date of shareholder’s es, the dis- treated as citizen or resident of States the United this However, where a either— tribution of exceeds dividend. percent (1) redeemed of the value of all of a shareholder’s stock decedent, generally treated estate of such or the amount received exchange (2) percent for in of the taxable estate of as a distribution stock, gain by being decedent, may such loss determined executor elect or basis) pay part imposed by (or for or all of sec- to the cost the tax reference past (but a 2001 in or not ex- surrendered. tion two more attempted ceeding 10) equal Any occasionally taxpayer to avoid such installments. by re- shall than the rule referred to above election be not later the dividend made holdings prescribed by 6075(a) taining but hav- time for own of stock section his filing (including which was the return such tax all of the stock redeemed family thereof), by made in or extensions and shall be held a close member of his Secretary estate, trust, partnership, or cor- manner or his del- such egate as the from a poration by regulations prescribe. If in he had a substantial which made, Alternatively, an election under section is the rule this interest. apply provisions by having oivn stock of this subtitle shall all his avoided delegate though Secretary providing redeemed, the reten- or his extending by partnership, were the time tion estate, held a purposes section, trust, corporation the tax. For this in which or shall be value for Fed- or a had a substantial interest determined he purposes. family. eral estate tax close member avoidance, “(b) Limitation.— such tax “To forestall maximum ‘at- amount tax which certain stock code contains paid provided in a installments as wherein stock tribution’ rules partner- family member, section shall amount which a be an or close ship, estate, imposed corporation trust, the same ratio the tax bears by (reduced interest, the credits section 2001 has an is attributed which he determining against tax) person such as the value closely corporation terest qualifies a held business from a whether distribution complete liquidation partial bears to under subsection is in corporation. estate. These his interest Closely (contained “(c) held business.— in sec. 318 attribution purposes section, code) the term of the determining in a means ‘interest held business’ whether a stock _ as a dividend or as an is to be treated corporation carrying (sec. 302) stock in a but also business, trade or if— to numerous other situations (A) percent However, cases, or more in value of the well. these other voting corporation vary applicability is in- somewhat.” stock of such of the rules added.) (Emphasis cluded estate decedent, accompany S.Rep. H.R. 1240 to (B) amending Cong. 318(a), or less 88th 2d. Sess. had shareholders. For of this sub- section, shall be as of determinations immediately the time before the decedent’s 6166 was added to Code Section *9 Tax Revision Act death. Small Business Special “(d) 206(a), 85-866, rule tioo interests in Pub.Law for closely Sept. 2, or held businesses.— more purposes (b), (a), pay- of subsection 6166. Extension time for “SEC. (h) (1), and in or more interests two ment of estate tax where estate consists requirements tate taxes where the estate consists the stock owner- largely closely ship of the Peoples Savings interest in a held in the three re- purpose20 deeming business. Its structure and is not attributed very is similar Taxpayer. to that of to particular, provision while is made for (B)— b. Included in De- closely stock of two or more held cor termining the Value of the porations Estate inclusion, by Gross there is no cross- otherwise, or reference of the rules any Nor do we think is ownership. constructive Taxpayer’s merit to conten alternative under We conclude that language tion that under (2) (B), factual situation involved, cor stock of the narrowly comply de porations by Peoples Savings fails with held requirements fined 303 relief. in “included the value 318 are Taxpayer’s the decedent’s estate.” therefore, not argument regard and in rests on purposes satisfying percentage fact that value decedents’ owner- closely respect businesses, purposes subparagraph held with and for of such in each of which there is included deter- the value of the trade or business shall mining decedent’s value of the be considered to be such reduced percent money property estate more than 50 of the total the amount of distributed, and other business, shall each such be single closely (ii) subparagraph (A) (ii) treated as an in a interest does not purposes apply respect redeemed; held business. For the 50 with to the stock percent tence, preceding subparagraph sen- and for closely closely an in busi- interest a held in interest held business represents preceding ness which sen- shall be considered to be such interest tence, closely an busi- interest held reduced the value of the represents surviving ness which deemed. spouse’s property interest surviving spouse and the com- provision primarily decedent designed 20. “This munity property possible keep shall be treated hav- together make it a busi- determining the val- enterprise been included in ness where the death of one larger ue of the decedent’s estate. owners of the business results “(h) imposition heavy Acceleration relatively payment.— (1) Withdrawal of funds from busi- estate tax. Where the decedent had a ness; disposition proportion of interest.— substantial of his estate (A) If— enterprise, vested in the business under money (i) aggregate existing may withdrawals of law this confront the heirs necessity breaking up and other from the trade with the of either business, qualifies selling larg- an in which interest the business to some (a), respect enterprise, under subsection with er business in order to obtain interest, equal per- pay to such or exceed 50 funds to Your committee believes that this result the Federal estate tax. cent of the value of such trade or busi- ness, especially has an unfortunate result (ii) percent businesses, or more value of an the case of small which tradi- closely tionally Therefore, interest qualifies held business which also are held businesses. removing any although subsection dis- tributed, sold, exchanged, cases, your or otherwise Federal estate tax in these of, disposed hopes by spreading then the extension time committee the that out provided period of tax in this sec- over which tax the estate apply, unpaid paid, possible tion shall cease to portion be it will be for the estate payable paid of the tax in installments tax most earnings to be for out of cases paid upon business, notice and demand or at least Secretary delegate. provide from the or it will the heirs with time to ob- (B) pay In the case of a distribution tain tax funds to the Federal estate upsetting operation of stock to which section 303 without (or so much of section as relates to business. Your committee believes 303) applies— provision particularly important section this preventing corporate (i) subparagraph (i) mergers (A) does respect maintaining enterprise system.” withdrawals of the free money property distributed; H.Rep. 2198, Cong., 85th 2d Sess.

233 porate property Peoples Savings ship Each for estate tax assets. share is tangible purposes ultimately property of was fixed at distinct from the 88.9% by corporation. generally 18 Am. fixed the See the value Commissioner of the redeeming (1965). Corporations the stock of Jur.2d 209 the Taxpayer that in effect tions. concludes recognized, Taxpayer’s When this is the estate of owner- valuation since gross argument The estate dissolves. ship Peoples Savings represented the four the stock of cluded value the of the stock of cor- value the Peoples corporations, one of which— porations, the Savings amounts substantial —owned agree. (2) (B) satisfied. cannot We of the other three Nevertheless, Peoples respect with the Doubtless valuation of “included the value that was closely Savings, companies personal held or determining the of decedents’ value usually if not be made sometimes Peoples the estate” was value underlying reference to the value of its Savings de- stock. That this this assets.21 But is far removed from primarily, perhaps even exclu- concluding repre- termined' that such valuation sively, by reference to the value of stock inclu- tax the sents estate does in other held sion estate of the various pur- change economic-legal fact for underlying up assets whose values made poses 303. computation. the provides The “value of Code the II. the estate of decedent shall field, point, parties * reverse * * At this by including determined demanding appli- now the Government all at time of death of rules of own- cation property, personal, tangible real or * * resisting. intangible, Taxpayer ership, *. The battle- 26 U.S.C.A. 2031 (a). includes, course, ground muddled has shifted to Savings Peoples dece- urg- (1), Taxpayer field22 Taxpayer’s argument dent. But fails redemptions qualify for ex- recognize the basic character of essentially change treatment as “not corporate stock. Such equivalent to a dividend.” personal property, incor- nature, distinct, poreal representing outset, Government At the right challenges Taxpayer’s share com- undivided or interest to raise belatedly mon con asserted and an issue conferring any no title the cor- the Tax Court. As Gov- sidered 54r-77, earnings Ruling appraisal, yardsticks cites Revenue 1954-1, 5(b). paying capacity.” at § C.B. 187 also See and dividend personal “The value of the stock of of Levenson v. Estate Commissioner family holding Revenue, company closely F.2d Internal underlying 581; In- lated to the value of Commissioner of the assets Richardson v. type Revenue, companies 1945, Cir., the stock. For F.2d ternal 102, cert, appraiser 796, should 66 S.Ct. determine the fair denied 326 U.S. Drybrough S., 490, 485; market values of the the com- v. U. assets of 90 L.Ed. pany. F.Supp. W.D.Ky., market values of underlying give weight po- assets due earnings par- problems presented tential dividends of the property underlying previously items of character- ticular have been stock, capitalized “nightmarish.” proper at deemed this Court rates ized investing company Fewell, Cir., at the date of States United appraisal. Moore, Dividend these reasons See F.2d adjusted Equivalency net worth be accorded Distributions should —Taxation greater weight Stock, valuing Redemptions Tax.L.R. the stock of a family personal holding (1964). company customary than

234 abandoned,” States, out, general points rule Maxwell United v. ernment it is Cir., 1964, 184, 181, Appellate F.2d we think will not con- 5 334 that an Court of attribution point we should reach issue sider not raised or decided a not on the Court.23 But this is merits. the Tax deficiency (see here. case notice doing again we faced so are Taxpayer supra) specified that note 7 problem whether, 302(b) under § qualify under either for relief failed to (1), ownership rules of Although initially 303 § § apply. Taxpayer’s 318 contention rests § by Taxpayer or asserted considered proposition each that if Court, Taxpayer’s conten- 302 Tax § redemp- separately treated, tion is argued raised, briefed, tions were and significantly propor- reduced on motion re- before the Tax Court ownership tionate control in the re- and petition consideration and to amend the deeming consequently corporations, and Raising reopen the an is- record.24 and 25 prior under were not decisions “essen- by timely sue motion reconsideration tially equivalent distribution of has been held sufficient to enable applies, taxable dividend.” If 318 how- § view. v. Commissioner of Internal Bell ever, the attributed from Peo- Revenue, 147, Savings 3 ples change 139 F.2d render the would virtually negligible. necessarily require control While this does not reviewing that the the in- Court look at question While the not free merits, trinsic rather than the lim- more doubt,26 think we construc problem ited more usual asserted rules tive are by Taxpayer of abuse of discretion 302(b) (1). 302(c) incorpo Section granting reopening, in not since the generally rates 302 the attribution fairly put 302 (with contention exceptions “is in issue 318 certain here.) inapplicable regulations pleadings proof, are redeeming corporations Helvering Inc., Investors, effected v. Cement redemptions 1942, 527, 1125, as follows: 316 U.S. L. were 62 S.Ct. 86 1649; Operating Petitioner’s Ed. General Petitioner’s Utilities & Ownership Ownership Helvering, 1935, 200, Co. v. 296 U.S. 185, 154; Helvering Before After S.Ct. 80 L.Ed. v. Salvage, 1936, 106, 375, 297 U.S. 56 S.Ct. City Hub 17.5% 32.4% 511; 80 L.Ed. United States v. Dresser Inc., Cir., 1963, Industries Banking 324 F.2d 56. Alabama 49.0% 66.0% generally Martens, See Federal Income Rock Finance 78.4% 25.7% (1965). Taxation 51.26 “B. court Petitioner further moves the motion, Taxpayer sought 24. In its reopening to order of the record in this following perti- receiving clude the deemed facts case evidence relating allegations.” nent foregoing contentions. respectfully “A. Petitioner moves relies on: permit petitioner court to amend its Co., 1960, Cir., v. Callan Court Cobb petition by adding following thereto the 532; 274 F.2d Lukens’ Estate v. Com- allegations: Cir., Revenue, missioner of Internal “1. The of stock in [Hub 1957, 403; Northrup 246 F.2d v. United City), Banking] [Alabama [Bock Cir., 304; States, 1957, F.2d Finance] referred in the Petition and States, F.Supp. Smith United Stipulation Facts 748; 131 Ct.Cl. Ferris v. United redemptions by corporations. said States, 1955, F.Supp. 286, 133 Ct.Cl. petitioner No stockholder other than has 257; Rosemary Wier, Trust for case T.C. redeemed said Memo No. 1952 P-H Memo T.C. ¶52,199 (June 25, 1952). changes petitioner’s - “2. The reía- ownership (disregarding Johnson, tive 26. See Rabkin & In- by petitioner through Peoples Gift, come, Sav- and Estate Taxation 24.- ings Company) (1966). 02A(4) Life Insurance said applied exhaustively legislative explicit.27 The examined the has history provisions rules under of these and similar attribution (l),28 First29 and Tenth have of the Code and have concluded *12 Congressional purpose accords with Circuits.30 and exist, they If intent. inconsistencies When account taken is having product body are constructively by Taxpayer, it is power to be not Whether consistent. signifi- apparent that there has been no and to extent should be what taxes laid cant shareholder’s modification of the exemption on these redeeming corpora- in interests31 granted should be inter- where death tions as a result of the distribution. many venes involves “consideration change in own- stockholder insubstantial complex, intricate, and tech- sometimes bearing ership and control a factor is nically significant factors which Con- right heavily against Taxpayer’s to 302§ gress, weaver, as,” like evaluates Moreover, (b) (1) aside from relief. Penelope, “it weaves and unweaves contrary Taxpayer’s this factor seamy web men tax call law.” United rec- little else assertions is Bond, Cir., 1958, States v. 5 258 F.2d 302 conten- ord which relates spoil 584. 577, If inconsistencies circumstances, Tax- tion.32 Under these change garment, Congress, is for not payer’s further contention us. denying Court abused discretion petition reopen the motion to amend Affirmed. for consideration of the 302 issue case also fails. REHEARING FOR PETITION ON EN BANC

III. CURIAM: PER Throughout tag One remains. end argument, Tax- Rehearing and on oral the briefs payer is denied Petition fervently argued Judge that would be panel nor of this no member totally manifestly un- inconsistent and on the Court regular service active in having requested just polled un- the rules of attribution the Court be yet 25(a), deny application un- their banc, der 302 sub- rehearing Rule en Rehearing 303, resulting in En instances der both (b), par. Petition however, have, We denial relief. is denied. Banc 27. a distribution “The whether consid- of the factors one 31. applying stock of a shareholder “net ef- so-called eration essentially equivalent a dividend listed Relevant factors fect” test. depends upon 1958, Fewell, Cir., v. States United repeated 496, 500-501, facts and circumstances of each case. F.2d Cir., 1960, Co., to be in mak- One of facts considered v. Cobb Gallan ing this determination the constructive 532, F.2d 537. of such shareholder un- 318(a).” sought reopen Taxpayer der in its motion 32. showing the dis- introduce evidence substantially pro rata tribution was Lewis, (1960), among 28. Thomas G. 35 T.C. 71 See 2 Rabkin the stockholders. recently Levin, Income, Johnson, and more Beatrice & Es- Gift (Appeal pending). (1966); Taxation, T.C. 258 24102A, at 2425 tate Revenue v. Sul- Internal Commissioner Bradbury livan, 607, Cir., v. 1954, Commissioner Internal 210 F.2d Cir., Revenue, 111, 1962, dissenting). (Rives, J., 298 F.2d 116- evi- Whether this aid view of dence would holdings high percentage of its stock questionable. 30. Commissioner Internal Revenue v. See seems Berenbaum, Bradbury 369 F.2d of Internal Commissioner Revenue, Cir., 298 F.2d