In re Estate of Schneider
Decision Date | 15 April 1987 |
Docket Number | Docket No. 6234-79 |
Citation | 88 T.C. 906,88 T.C. No. 50 |
Parties | ESTATE OF AL J. SCHNEIDER, DONALD J. SCHNEIDER, ET AL., PERSONAL REPRESENTATIVES, AND AGNES SCHNEIDER, PetitionersCOMMISSIONER OF INTERNAL REVENUE, Respondent |
Court | U.S. Tax Court |
(2) The amounts received by A are essentially equivalent to dividends and are taxable as distributions. Secs. 302(d), 301, I.R.C. 1954. Robert E. Nelson and Arthur Kaftan, for the petitioners.
Edward J. Roepsch, for the respondent.
Respondent determined deficiencies in Federal individual income tax against Al J. Schneider and Agnes Schneider for 1975 and 1976 in the amounts of $17,745.84 and $21,415.00, respectively. After concessions by both sides, the issues for decision are as follows:
(1) Whether certain dispositions of stock by Al J. Schneider constitute (a) sales of stock by him to employees or (b) redemptions of the stock from him.
(2) If the dispositions are redemptions, then whether the redemptions are essentially equivalent to dividends.
(3) Alternatively, whether the dispositions are taxable under section 83. 1
Some of the facts have been stipulated; the stipulations and the stipulated exhibits are incorporated herein by this reference.
When the petition was filed in the instant case, petitioners Al J. Schneider (hereinafter sometimes referred to as ‘Al‘) and Agnes Schneider (hereinafter sometimes referred to as ‘Agnes‘), husband and wife, resided in Green Bay, Wisconsin. After the trial of this case, Al died and his estate was substituted as a petitioner. Al and Agnes were cash basis taxpayers; they filed their Federal individual income tax returns on a calendar year basis.
Schneider Transport, Inc. (hereinafter sometimes referred to as ‘Transport ‘), formerly Schneider Transport and Storage, Inc., a Wisconsin corporation founded by Al in 1938, was engaged in interstate freight transport. During 1975 and 1976 Transport was part of a group of affiliated corporations that included Transport's parent corporation, American National Corporation (hereinafter sometimes referred to as ‘ANC‘) 2 and ANC's successor, AMNACO, Inc. (hereinafter sometimes referred to as ‘AMNACO‘), subsidiary corporations, and several other closely-held corporations which owned the real estate used by the affiliated corporations, rented trucks, distributed tractor and trailer parts, or engaged in other activities related to the business of common carriage by truck. 3 For the period 1971 through 1976, the affiliated corporations filed their tax returns for the calendar year, using the accrual method of accounting.
As of December 1, 1971, Transport had an initial authorized capital of 2,000 shares, $25 par value, Class A voting common stock and 6,000 shares, $25 par value, Class B nonvoting common stock; the 4,578 shares of the two classes of stock issued and outstanding were held as follows:
+----------------------------------------------------------+ ¦ ¦Class A¦Class B¦ +------------------------------------------+-------+-------¦ ¦Al4 ¦1,007 ¦1,921 ¦ +------------------------------------------+-------+-------¦ ¦Agnes ¦--- ¦30 ¦ +------------------------------------------+-------+-------¦ ¦Don ¦520 ¦220 ¦ +------------------------------------------+-------+-------¦ ¦Paul C. Schneider ¦--- ¦220 ¦ +------------------------------------------+-------+-------¦ ¦James L. Schneider ¦--- ¦220 ¦ +------------------------------------------+-------+-------¦ ¦John Schneider ¦--- ¦220 ¦ +------------------------------------------+-------+-------¦ ¦Agnes, as custodian for Kathleen Schneider¦--- ¦220 ¦ +------------------------------------------+-------+-------¦ ¦ ¦1,527 ¦3,051 ¦ +------------------------------------------+-------+-------¦ ¦ ¦ ¦ ¦ +----------------------------------------------------------+
During 1971, Al was the president, chairman of the board of directors, and principal shareholder of Transport; Agnes was a director and vice-president; and Don was a director and the secretary. Paul Gustafson, an individual unrelated to the Schneider family, was the treasurer of Transport.
In December 1971, Transport's authorized capital was changed to 100,000 shares, $.50 par value, Class A voting common stock and 300,000 shares, $.50 par value, Class B nonvoting common stock and the foregoing shareholders' stock was split on a 50-to-1 basis.
On March 2, 1973, ANC was formed to be the parent corporation of Transport and most of the affiliated corporations. On December 5, 1973, ANC adopted an amendment to its Articles of Incorporation which gave ANC an authorized capital of 500,000 shares, $.10 par value, Class A voting common stock and 1,500,000 shares, $.10 par value, Class B nonvoting common stock. In January 1974, the shareholders of Transport received five shares of the same class of ANC stock in exchange for each share of Transport stock held. Thereafter, ANC's 1,159,440 outstanding shares of common stock were held as shown in table 1 below.
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