Securities Law Commons^™

Taxation-Income Tax-Dealings By Corporation In Its Own Stock, John N. Seaman

Michigan Law Review

From 1921 to 1929, appellee corporation bought shares of its own stock, not for retirement, but to sustain the market, to increase the number of shareholders by resale in smaller blocks, and for other reasons. This stock was held as treasury stock. In 1929 it was sold by the corporation, at a profit. From 1920 to 1934 the Treasury Regulations exempted the proceeds of such a transaction from income tax, treating the purchase and sale as separate decrease and increase in the capital, and not as resulting in income. But in 1934 the regulation was changed, so as to tax …