Peter R. Fink Karla S. Fink v. Commissioner of Internal Revenue

INTERNAL OF COMMISSIONER MILBURN, Before KRUPANSKY and REVENUE, Respondent-Appellee. JOINER, Judges, Dis Senior Circuit No. 84-1806. Judge *. trict Appeals, United States Court of MILBURN, Judge. Sixth Circuit. (“tax- Fink and Fink Peter R. Karla S. Argued 1985. Oct. the Unit- payers”) appeal from a decision of April

Decided determining Tax Court deficien- ed States taxes for taxpayers’ cies in federal income taxpayers claimed that 1976 and 1977. The non-pro rata surrender of stock to the them to an or- issuing corporation entitled dinary under section 165 of the Inter- loss (the “Code”), 26 U.S.C. Revenue Code nal held that a 165. The Tax Court of sharеs to the rata surrender improve corporation to recognition permits is not an event instead, constitutes, a contribu- of loss and corporation’s capital. For Joiner, Judge, sitting tion to the District Senior follow, reverse. dissenting opinion. we designation, reasons filed a * Joiner, Michigan, sitting by designation. Judge, Senior trict of Honorable Charles W. Dis- for the Eastern United States District Court preferred Fink, of

I. suance to Mr. Mrs. stock (Mr. mother), Fink and Elise Fink Fink’s if Taxpayers principal stockhold- were the other declined shareholders the offer. Corporatiоn. Throughout ers of Travco February 25, 1977, being On after unable 1970’s, largest part Travco’s of persons, to sell the stock to other Travco and sale business involved manufacture $700,000 vehicles, preferred sold of homes, its convertible of motor recreational and energy stock to Mr. Peter component parts. their crisis and Mrs. R. Fink and Fink, $200,000 of M. of 1973 and 1974 caused a decline the Elise and subordinated market homes for motor and recreational indebtedness to the same stockholders. vehicles, resulting earnings in a decline in return, joint taxpayers On weakening and a of Travco’s $197,781.64, an of ordinary claimed loss dition. 116,146 representing the of energy At the time of crisis of by shares Travco stock surrendered Mr. following, enjoyed Travco a line of credit return, On joint Fink. their 1977 taxpayers with National Bank of De- Manufacturers claimed as a an miscellaneous deduction $3,400,000. $3,000,000 troit of Because ordinary $191,257.61, representing loss of condition, of Travco’s weakened financial 80,000 of the basis shares of Travco Manufacturers National became concerned stock that Mrs. Fink surrendered to the ability repay about Travco’s its borrow- corporation. The Commissioner disallowed ings. During National 1976 Manufacturers deductions, the claimed and the Tax Court pressure put repayment upon Travco. affirmed. attempts Travco’s to obtain new Court, In Tax relied unsuccessful, and late 1976 Travco long culminating line of in Smith entered lend- negotiations into with a new Commissioner, v. (1976), rev’d 66 T.C. 622 er, City Bank of National Detroit. As a sub nom. credit, extending condition of City National (5th Cir.1979), F.2d required $900,000 Travco to obtain of new non-pro shareholder’s rata surrender of capital, $700,000 $200,000 of issuing corporation stock results subordinated debt. ordinary an immediate loss. Following the 22, 1976, On December Mr. Fink surren- in Schlep- of Smith Fifth Circuit’s reversal 116,146 dered to Travco shares of Travco’s Court, py, in Frantz v. Commis- Tax $197,- having common stock a total basis of sioner, (1984), affd, 83 T.C. 162 784 F.2d 781.64. Mrs. Fink surrendered to Travco (2d Cir.1986), prior overruled its line of 80,000 shares of Travco common stock hav- cases held that a rata stock $191,257.61. a total No other basis of surrender should as a be treated non-de- shareholders surrendered shares. In ductible contribution to the in- purpose the stock surrender was case, stant held in Court favor improve position, Travco’s financial the Commissioner on the basis of Frantz. business, preserve its and to increase the attractiveness of the to outside II.

investors. The surren- number shares to the corporation dered was calculated to taxpayer In owned 65% reduce outstanding number preferred stock common and 13% 1.4 million and thus a new below allow Biallot, (“ABL”). stock of Andree Ltd. acquire investor to control of Travco investors, effort attract outside $700,000 investing par new value $1.00 his contributed to preferred stock into 1.4 million convertible preferred ABL stock and his notes and shares of common. TraVco representing accounts receivable debts offering preferred Prior to owed him ABL. ‍​‌‌​​​​​‌​‌‌‌‌​‌‌‌‌​​​‌‌‌‌​​‌​‌​‌​​​‌​​​‌​​‌​‌​​‍This transfer was new shareholders, proportionate surrender to Travco’s Travco’s directors made without Taxpayer passed authorizing the is- other claimed an resolution stockholders. The Tax stated its decision in the amount of shares. Court deduction lоss as follows: stock. The Commissioner basis in the loss, af- Court necessarily follows disallowed This conclusion ... firmed. purpose held that recognition from a issuing corpora- transfer, shares to the that is to the financial bolster and, position should improve corporation] its financial tion to [the hence, capital protect to make as a contribution to more valu- be characterized shares, petitioner’s the surrendered retained and a resulting in the basis of able consequent fit the inability the basis of the transaction being added to shares statutory language the authoriz- within retained. ing a deduction for “losses incurred in the In Frantz the Tax Court determined profit.” into for transaction entered the surren- question to be “whether crucial 83 T.C. at 181. a loss ‘incurred der constitutes profit’ Schleppy, Relying entered into for within on the transaction Second 165(c)(2).” 83 meaning section T.C. the Tax decision in the affirmed Court’s Commissioner, Frantz. Frantz v. recognized that 784 Tax Court at 179. The (2d Cir.1986). upheld it to decide The court required issue F.2d 119 resolution of this taxpayer’s non-pro competing viеws of stock treatment of the which of two capital ex- applicable to this situation. surrender as a non-deductible ownership was view” change in “fragmented penditure the overall Under “[b]ecause taxpayer’s corporation] is ownership share of stock considered the interest each [the compared taxpay- A who with the shareholder was miniscule separate investment. issuing corpora- company.” retained interest to the surrenders shares Frantz, court, however, finally disposed at 125. The cаu- considered to have tion is surrendered. The that its “should not be con- particular shares tioned governing by a stock- closes the transac- strued as surrenders of the shares equity interests tion, is entitled to an holder of more substantial and the shareholder Frantz, truly resulting See ordinary loss. 83 that could be viewed immediate Frantz, at 126. “unitary view” an immediate loss.” at 180. Under the T.C. entire ownership the “stockholder’s stock Frantz, the Tax Court consist- Prior single indivisible is viewed as a rata stock surren- ently held Frantz, T.C. at 188 unit.” 83 gave to an immediate ders rise (Parker, J., dissenting). surrendеring Commissioner, See, e.g., Smith v. 66 loss. having surren- recognized sub nom. (1976); rev’d T.C. for the benefit of stock dered stock Commissioner, 601 F.2d 196 Schleppy v. open, and The transaction remains tained. v. Commis- (5th Cir.1979); J.K. Downer surrendering shareholder must add the sioner, Estate (1967); 48 T.C. shares to the basis of the surrendered Commissioner, Foster v. 9 T.C. Frantz, 83 T.C. at of the stock retained. Miller v. (1947); 45 B.T.A. 180-81. (1941). In Foster the Tax Court general “when a stock- view” stated the rule that adopted stock to im- part holder surrenders of his concluded that stock prove a loss the financial condition did not constitute stoсk surrender loss, measured 165(c)(2) there tion he sustains a deductible because event under section surrendered, less According by the basis of the stock no “closed transaction.” in the value of resulting improvement non-pro rata stock surrender In 9 T.C. at in the stock retained.” transaction open, an non-taxable stitutes Thus, held that a Downer the Tax Court nature of a contribution. stock to an portion of his recogniz- er’s transfer of taxpayer suffered a whether pur- for the employee corporation until not be determined able loss could inducing employee to render pose of disposition of the retained there was a corporation property by services resulted after transfer of such corporation employee____ deductible loss. 48 immediate T.C. The decisions Downer and Foster case, Unlike the instant sole issue premised was the validity the Commission- Tilford er’s explicit- both decisions interpretation 83(h) as set refused ly to characterize the transfers as 1.83-6(d). forth in Resolution capital. Downer, contributions T.C. hinged issue upon lаnguage found in 91; Foster, 9 T.C. at 934. In Smith report of Finance Senate Commit- its holdings Tax Court reaffirmed in Foster tee on Reform Act of 1960: and Downer. The Court stated: general, where or parent company’s It is a stock- well established that where compen- a shareholder's stock used to holder of a some surrenders employees sate under a restricted stock holdings of his stock to such plan, parent transfer of stock without consideration and such transfer company or the shareholder is to change results in proportionаte a of his capital treated as a contribution to ownership corporation, in that interest company which is be to entitled to having stockholder not treated as in deduction accordance with the restrict- made a capital contribution to but real- property ed rules. upon izes loss surren- occasioned 83(h) The Tax Court concluded that section der of such shares. provision income and was an that it did not T.C. at 66 itself to consequences address the tax ato provides who stockholder sharеs used in a In overruling prior its the Tax Therefore, plan. restricted stock relied on Fifth decision Court Circuit’s 1.83-6(d) found Treas.Reg. Court outside Commissioner, in Schleppy § v. 601 F.2d We, scope legislation. (5th the intended Cir.1979),rev’g 196 Smith v. Commis however, reversed the Tax Court and sioner, (1976), found 66 T.C. 622 and this court’s Treas.Reg. 1.83-6(d) consistent with the § in decision v. 705 Tilford 83(h). legislative purpose stated of (6th Cir.), section denied, F.2d 828 cert. 464 U.S. 992, 485, (1983). 104 78 S.Ct. L.Ed.2d 681 Schleppy, In the Fifth Circuit reversed In corporation the shareholder of a Court’s in held Tax decision Smith and Tilford employees pur transferred stock to for ratа to surrender pose inducing accept them to or continue improve the financial condition of the cor- employment. The Commissioner disal poration did in not result an immediate capital lowed the claimed loss deductions taxpayers. loss to the The court capital treated the transfers as contri ‍​‌‌​​​​​‌​‌‌‌‌​‌‌‌‌​​​‌‌‌‌​​‌​‌​‌​​​‌​​​‌​​‌​‌​​‍in concluded that the basis of the 1.83-6(d). butions under Sec § the shares surrendered should be added 83(h) provides in tion of the Code remaining in their basis shares. 601 of a of property event transfer which is 199. Schleppy F.2d at found that there “ subject to section “there be al shall loss in was no ‘incurred transaction ” lowed as a deduction under section profit’ recognizable entered into for un- person performed whom 165(c)(2). der 601 F.2d at 199. in services connection with which such “voluntary Schleppy pay- observed that transferred____” Treas.Reg. property was corporation ments a stockholder to his 1.83-6(d) part: in states in to bolster order

If corporation trans- cannot be claimed as a loss.” 601 F.2d employee perceived fers to an that it ... 197. The court then wrote performed sideration pay- of services no between a shareholder distinction corporation, be con- corporation the transaction shall cash to the and a share- prop- surrendering part sidered to of his shares to be a contribution of such holder erty such bolster the financial health shareholder, immediately there- tion. Id. Schleppy criticized the Tax court III. on the decisions Foster reliance Court’s “open analy transaction Court’s interpreted Schleppy Foster analytically and Downer. sis” sound if adopt we view” of stock owner holding that a shareholder’s (Parker, ship. J., T.C. at 188 dissent of shares surrender However, court, ing). this like the Tax requires the basis the sur- Court, previously “frag has adhered to added to the basis of rendered mented deter 601 F.2d at 198. stock retained. mining of stock sold or ex the basis distinguished Downer involv- States, changed. See Curtis United party transfer to a third and as ing a stock Cir.1964); (6th F.2d 714 Leake v. Commis recognition of a loss where the requiring sioner, (6th Cir.1944), 140 F.2d 451 cert. significant results in reduction denied, 89 L.Ed. 323 U.S. S.Ct. percentage оf in the shareholder’s owner- (1944). In Leake this court stated: ship in the Id. share- the taxpayer “Fairness to both in Downer decreased holder’s requires the Government allocation of cost percent just the shares to from 66.67 basis, on a share the cost deducted percent, whereas Smith over purpose from each share as sold for the ownership decreased from shareholder’s Leake, determining gain or loss.” 140 F.2d percent percent. Moreover, 70.12 68.57 generally the tax law “fractional, reflects a view of divisiblе adoption support further of its property, seeking to basis and rec allocate view, suggested ’’Frantz ognize gain immediately or loss when a profit began for entered into transaction larger part property disposed of the is of.” the shares were surrendered. when Frantz, (Parker, J., 83 T.C. at 189 dissent profit sought asserted that the Tax Court 1.61-6(a) ing). See also increase value of the was the in the (1960); Commissioner, 555 F.2d Byram v. remaining stock investment. 83 T.C. Cir.1977); (5th Fasken v. Com Because it not be determined could missioner, (1979). 71 T.C. 655-57 whether the stock surrender would de- We that dо not believe the facts crease or increase the value overall present justification instant case sufficient until retained shares were the abandoning “fragmented for the view” of of, disposed concluded Frantz that ownership, firmly a rooted principle stock was closed and that transaction not law and in this court’s decisions. tax taxpayer had realized no loss. Id. represents perma Each of stock a share ownership nent or inter proprietary prior position also noted that its Frantz Eus est J. B. Bittkеr & encourage “conversion eventual would tice, Corpo Income Taxation Federal into immediate loss- losses ¶ (4th Shareholders, ed. 14.31 rations and that a 165(g)provides es.” securi- Section 1979). variety of is entitled to a The holder during ty which becomes the tax- worthless right rights, receive divi such as will be as a loss from the year able treated dends, right corporate to share in as exchange” day last “sale or on the dissolution, right vote on on sets year. reasoned a taxable Id. a matters. With verge in a on the shareholder stock, rights are rata surrender of these 165(g) could the section of failure avoid propor relinquished, the shareholder’s by surrendering the limitations stock be- ownership interest is reduced. tionate 83 T.C. fore it became valueless. at 91; Frantz, Downer, at T.C. 48 T.C. prior if The Tax Court concluded that (Parker, J., dissenting). Consequently, stand, permitted the result surrendering suffers an enjoy practical equivalent “the of a will would be The shareholder immediate loss. increase future judicial repeal 165(g).” a smaller share Moreover, corporate value. in- future Court in Frantz and the Fifth Circuit in come the shares earned Schleppy would have that the transaction entered into through liquidation profit or began dividends lost. for when the shares were surrendered, The shareholder has incurred an economic ‍​‌‌​​​​​‌​‌‌‌‌​‌‌‌‌​​​‌‌‌‌​​‌​‌​‌​​​‌​​​‌​​‌​‌​​‍not when the shares were fully will originally purchased. loss that not be accounted for reasoning ig This the increased basis of the retained stock. principle nores well-settled profit, objective purposes for of section view,” the “unitary Under 165(c)(2)is property determined when thе can result in ascer- only Bittker, acquired. See B. Federal Taxation gain tainable or loss the stockholder when Income, ¶ (1981). 25.3 Gifts, Estates disposed remaining has of his shares. Un- Parker, Frantz, Judge dissenting in wrote: analysis, dispos- der this a shareholder who Generally, requisite profit objective gain, es of his shares at a to enhance the dealings property (or is established investment, remaining value his established) not when is ac- recognition postpone gain must his of that quired. The discus- [citation omitted] reducing remaining his basis sion of the taxpayer’s for surren- reasons cognizable gain shares. He cannot have a dering enhancing the value of disposition because his does not result stock— and hence the value of light poten- “closed transaction.” In remaining negate his shares —is to abuse, Congress tial for it is doubtful that argument Government’s that the surren- willing indefinitely delay recog- would be gift, was der Once [citation omitted] gain nition of on such a transfer. disproved has Commis- (Parker, J., dissenting). [the 83 T.C. at 188. claim that the stock surrender sioner’s] Second Circuit Frantz and the reasons, personal profit ... Fifth in Sсhleppy adopted “uni- objective acquisition of his initial stock tary because the disposition. characterizes its shareholders incurred minimal 83 T.C. at 190. If the in Schleppy courts their percentage duction in and in Frantz had followed the well-estab- spec- result of the surrender. courts ” view, lished the transactions ulated that the shareholders’ net would have been closed at the time of the positions substantially would not be surrender and squarely would have fit taking duced in- after into account the 165(c)(2). within section of creased value the retained shares. 124; Frantz, 601 Schleppy, at F.2d at 198. we in the While share Tax Court’s However, both courts indicated will- prevention cern the of sham transac- ingness tions, allow an immediate we do not believe that our continued loss where the in im- surrender results adherence to view” will pact magnitude effectively 165(g). of some undefined nullify As noted, corporation. Judge shareholders’ interest judiciary Parker has de- 125; Frantz, 601 Schleppy, veloped at F.2d at 198. tests numerous for tax evasion reasoning This addresses the size of the can apрlied that be to a stock surrender. loss, question recognition, Frantz, not 83 192. The T.C. at traditional tax implicitly recognizes doctrines, that the value common- law such as substance form, may fully transaction, step not surrendered be ab- over sham transac- Moreover, rule, by sorbed retained shares. purpose tion are business approach uncertainty this fosters will prevent sufficient to abuses that arise. produce litigation Moreover, “much future burden is on the over magnitude impact particular prove surren- er to the “bona fides” of the stock J., (Winter, ders of stock.” at 127 surrender.

concurring). Neither the Fifth Circuit’s decision in

Adoption of the in view” is not nor this court’s decision Til- supported by requires suggestion by “frag- abandonment of ford merited, er, ownership. Judge at 91. As Parker ob- With T.C. served, that Schleppy, disregard it is our view we cannot “the fact that respect proposi- for the relied on change Foster cannot be does not a cash contribution requires the stock surrender tion that a proportionate ownership in- shareholder’s to be increased the retained stock basis the other terest vis-a-vis in the surrendered taxpayer’s basis by the non-pro rata sur- shareholders whereas the majority and the In Frantz shares. render of shares does.” 83 T.C. at 191 interpretation rejected Schleppy’s dissent (Parker, J., dissenting). n. 83 T.C. of the decision Foster. only applicable Our decision in is Tilford We, Court, Tax read like the property 83 transfers of con to section as Foster performance of nection with the services. measured an immediate loss allowed 83, Congress By enacting section altered the stock surrendered less legisla result reached in Downer. The resulting in the value of the stock increase history of section 83 makes it clear tive retained. 9 T.C. Congress that intended to treat the trans Furthermore, not we do believe to a fer of stock a shareholder involving a distinguished can be Downer employee Con contribution than a sur- parties to third rather transfer not, however, gress altered the result has view, our render to the Congress presumed is reached Foster. third-party issue in both the fundamental judicial aware of settled construction and in the direct trаnsfer cases adopts unless and thus that construction it .type either of transfer cases is whether See, change affirmatively e.g., acts to it. that results a closed transaction constitutes v. Federal Labor Florida National Guard The difference be- recognizable loss. Authority, 699 F.2d Relations transfer for consideration and tween a (11th Cir.), denied, 464 U.S. cert. pur- is relevant direct surrender (1983). We there S.Ct. 78 L.Ed.2d characterizing resulting gain poses of Congress intended the fore conclude that (Parker, J., Frantz, 83 T.C. at 191 or loss. engages who dissenting). of an to have the benefit stock surrender the situation Nor do we believe loss. immediate surrenders shares is a shareholder where the circumstance indistinguishable from V. gives ‍​‌‌​​​​​‌​‌‌‌‌​‌‌‌‌​​​‌‌‌‌​​‌​‌​‌​​​‌​​​‌​​‌​‌​​‍property cash or a shareholder where corporation. When cash or stated, to the we REVERSE the reasons For corporation, the given and RE- decision of the Court increased the value tion’s of whether the MAND for a determination capital A contributed. true taxpayers the stock surrender of price represents an additional contribution in value of their in an increase resulted paid for the stock. B. Bittker See & J. Barring finding, remaining shares. such Eustice, Income Taxation Cor- Federal ordinary loss entitled to an taxpayers are (4th Shareholders, porations 113.14 of their basis for the full amount deduction 1979). in- taxpayer’s proportionate ed. The in the surrendered shares. corporation remains un- terest changed and “the contribution will be JOINER, Judge, dissent- District Senior for his stock.” flected in an increased basis ing. does non-pro A rata stock surrender majority dissent from respectfully I not, however, price represent an additional I affirm the decision opinion, for would a shareholder paid for the stock. When Fifth opinions of the Court. surrender, corporate non-pro rata makes a Commissioner, 601 Schleppy v. sharehold- increased but the capital is not Cir.1979), (5th of the Second Cir- F.2d 196 proportionate percentage er’s Commissioner, 784 F.2d 647; in Frantz v. Smith, cuit T.C. at Down- is reduced. (2d Cir.1986), company, justification of this court in no Til exists for treat- (6th 705 F.2d v. loss, the change capital in value as a ford 992, Cir.), denied, cert. 464 U.S. 104 S.Ct. much less as an оne.” At 125. 485, (1983), support 78 L.Ed.2d 681 this As in the Schleppy and Frantz conclusion. here reduced their corporate majority, As indicated slightly, in this case from majority characterized two shareholders’ 68%, to and maintained 72% their slightly rata surrender less than taxpayers’ control. Because the stock sur- percent two of their stock to the render left in substantially them the same corporation as a non-deductible contribu- position they held, they previously capital, tion to than a rather deductible any have not meaningful suffered sort of taxpayers’ loss. The basis the surren- loss. added dered was therefore to their In Tilford, this court held that a remaining shares. 601 F.2d at er who corporation sold stock a loss to voluntary pay- 199. The court that a noted employees accept ment of cash to the to to induce them to bolster or con- its financial is considered a employment capital contri- tinue made a contribu- court found it bution “diffi- corporation, tion to the rather than suf- perceive why cult to distinction should fered a deductible loss. found that Tilford if, paying arise instead of cash to the cor- Congress, by enacting Internal Revenue poration, part the shareholder surrenders 83, Code section indicated that it viewed his corporation’s shares to bolster two parts: transaction in the taxpay- financial health.” Id. The Fifth capital corpora- contribution of that, event, Circuit then held tion, corporation’s subsequent taxpayers had they not demonstrated that transfer compensation of the stock as genuine had suffered a loss because of the emplоyees. majority distinguishes surrender. The observed that court case, present stating from the Tilford taxpayers retained over 68% out- merely it validity affirms the shares, standing thereby retaining corpo- 1.83-6(d) interpretation as an of section surrendering only rate control while very 83. provi- While relies on these Tilford part holdings improve small conclusion, reaching opinion sions in corporation’s position. Id. at 198- suggests that its should be accord- 99. meaning. ed a broader It states that the case, opinion its recent the Frantz reasoning Schleppy opinion “further taxpayer’s the Second Circuit held that the explicate^]” its conclusion. 705 F.2d at closely- rata stock surrender to a also finds its result consistent Tilford corporation, held made to enhance the val- early Supreme with Court tax cases hold- continuing of the taxpayer’s ue ing that pay- a shareholder cannot deduct by improving company’s financial con- ments made for the benefit of his dition, was a contribution rather Pont, (citing Deputy tion. Id. at 830 v. Du an ordinary than loss. The had 308 U.S. 60 S.Ct. L.Ed. nonvoting preferred stoсk, surrendered his (1940) and Transit Interstate Lines retained but control of Commissioner, 319 U.S. 63 S.Ct. continuing voting hold com- 65% (1943)). 87 L.Ed. 1607 deciding mon stock. that the attempt distinguish majority’s The Til- contribution, had made a the Second presents present from the case a fur- emphasized that the stock surren- ford majority’s approach ther difficulty. The substantially had not der reduced the tax- accords different tax treatment to a share- payer’s net equity in the “Be- party holder’s transfer of stock to a third change cause the in the taxpayer’s overall corporation, for the compared interest in ABL miniscule benefit surrender of stock taxpayer’s with the interest in the shareholder’s direct retained purpose. the same corporation for It distinguish little theoretical sense to makes America, UNITED STATES of these two transactions. In both between Plaintiff-Appellee, parts the shareholder with stock to or enhance the value of his remain- protect PLUMMER, Robert Both transactions are best ing investment. Defendant-Appellant. capital. viewed as a contribution No. 85-3329. majority heavily per- relies “fragmented apply need to ceived Appeals, United States Court of present view” Sixth Circuit. It each share of stock as a case. views Submitted Feb. 1986. separate majority investment. holds 2,May Decided recognize taxpayers are entitled to gains immediate or losses when surrender- corporation, shares to the finally disposed taxpayers have

particular shares surrendered. Whatever

validity may have context, present it should not

outside of the validly applied here. Each share cannot

be regarded separate as a investment that terminated, separately when the disposing

ers’ sole motivation in of certain ‍​‌‌​​​​​‌​‌‌‌‌​‌‌‌‌​​​‌‌‌‌​​‌​‌​‌​​​‌​​​‌​​‌​‌​​‍they is to benefit the other shares

shares surrendered their

hold. their action affected because shares, making

the value of other a con-

tinuing feasi- Viewing

ble. the surrender of each share

as the termination of an individual invest- ignores very reason sur-

ment for the Particularly in

render itself. cases such

this, where the diminution sharehold- control interest illusory,

so minute as to be the stock sur- regarded

render should be as a contribu-

tion to reasons, foregoing

For the I would af-

firm the decision of the Court.

Case Details

Case Name: Peter R. Fink Karla S. Fink v. Commissioner of Internal Revenue

Court Name: Court of Appeals for the Sixth Circuit

Date Published: Apr 30, 1986

Citation: 789 F.2d 427

Docket Number: 84-1806

Court Abbreviation: 6th Cir.