La Fera Contracting Co. v. Commissioner

Memorandum Findings of Fact and Opinion

QUEALY, Judge: The respondent determined a deficiency in petitioner's income tax for the taxable year ended September 30, 1964 in the amount of $5,214.02.

Other issues having been previously disposed of, the parties filed a stipulation at trial in which the petitioner conceded the respondent's disallowance of the petitioner's claimed salary deductions.

This stipulation of the parties also sets forth their agreement concerning the disposition of a preferred stock redemption issue. They agreed that with respect to this issue, they would be bound by the ultimate judicial*172 determination in the consolidated trial of Joseph Miele, et al., 56 T.C. No. 45. (Docket Nos. 405-70, 421-70, 422-70, 423-70). In the Miele case, we found and held that the preferred stock redemptions were essentially equivalent to a dividend and did not qualify as a distribution or payment in exchange for stock under section 302(a). Therefore in accordance with the stipulation of the parties, we hold the preferred stock redemptions in question in the instant case were essentially equivalent to a dividend and do not qualify for section 302(a) treatment.

Decision will be entered under Rule 50.