Cummins Diesel Sales Corporation v. United States

This is an appeal from a judgment for the United States in an action for refund of income taxes. Appellant taxpayer held preferred stock with provisions requiring cumulation of unpaid dividends. The stock was redeemed and sums paid to taxpayer were equal to par value plus accumulated, unpaid, accrued dividends, not previously declared. We agree with the district court, following a longstanding administrative interpretation, that since the dividends had not been declared prior to and independently of the corporate decision to redeem, the entire sums should be treated for tax purposes as distributions in exchange for *669 the sto;k, resulting in a capital gain, and nopart should be treated as dividend ordinary income. Nothing need be added to the opinion of the district court. 2

The judgment is affirmed.