131 F.2d 394 | 5th Cir. | 1942
What is in question here is whether payments made as dividends on preferred stock were in fact dividends or were interest paid on indebtedness within and therefore deductible under Section 23 (b), Revenue Act of 1938, 26 U.S.C.A. Int. Rev.Code, § 23(b). The Board thought the obligations were, as they purported to be, certificates of stock, and the payments were, as they purported to be, and were treated as, dividends on stock. It sustained the commissioner’s determination. The taxpayer has appealed. Both taxpayer and commissioner recognize as correct, indeed they both invoke, the rule laid down in the South Georgia case, United States v. South Georgia Ry. Co., 5 Cir., 107 F.2d 3, at page 6, that while in each case the form the obligations and payments take has significance, it is not controlling, and “that the question for decision in each case is, not what the payments are called, but what in fact, they are, and that if taken as a whole, the evidence shows a relation of debtor and creditor, the payments made on account of that relation, will be interest, no matter how called, while if taken as a
The judgment is affirmed.