The opinion
LittletoN, Judge,
concurring: Defendant appears to rely upon the number of acquisitions by the Retail Credit Company of its Class A preferred stock in support of its position that the amounts paid for such stock were distributions in partial liquidation, but there is nothing in the record to show or indicate that there was any concerted action or intention on the part of the company and the stockholders or that there was any intention or scheme by the corporation, or by any stockholder, such as was contemplated by Congress in sec. 115, to enable any stockholder to escape normal and surtax on the profit derived from the sale of stock by using the capital gains provision of the taxing act on distributions in the nature of dividends. So far as the evidence shows, the Retail Credit Company simply decided to acquire some of its outstanding Class A preferred stock, not for the purpose of completely cancelling it, but subject to reissuance or sale. It had a right under the statute to do this without rendering the gain to the stockholder taxable one hundred percent as a dividend. Reissuance or sale of treasury stock so acquired gives rise to a taxable gain or a deductible loss to the corporation. Edwin L. Wiegand Co. v. United States (decided this day) and cases therein cited. [Ante, p. 111.]
There is a complete absence of any evidence to show that in purchasing the Class A stock from certain stockholders who were willing to sell it the Retail Credit Company did so for the purpose of completely canceling and retiring the stock. It must be assumed that Congress was aware of the fact disclosed by numerous published decisions relating to income taxes that corporations frequently acquire their own stock and hold it as treasury stock subject to reissue or resale; that, in so acquiring stock, they often cancel the certificates but do not completely cancel the stock as such; that corporations also frequently reissue or resell such stock. It must also *172 be assumed that when Congress enacted the Eevenue Act of 1936, in subsection (c) of which it inserted the provision relied upon by defendant which related to amounts distributed in partial liquidation, i. e., “despite the provisions of sec. 117 (a), 100 percentum of the gains so recognized shall be taken into account in computing net income,” it was aware of the Treasury Eegulation, art. 543, regs. 65, in effect from May 2, 1934, that a resale by a corporation of its own stock results in a taxable gain or a deductible loss. From this it must be concluded that Congress did not intend that such acquisitions or bona fide redemptions of stock should, standing alone, be treated as distributions in partial liquidation, and that it was for this reason that sec. 115 (i) defined a distribution in partial liquidation as being a distribution “in complete cancellation or redemption of part of its stock.” The instant case is therefore, on its facts, excluded by see. 115 (i) from the provisions of 115 (c) upon which the defendant relies.
The gain received by plaintiffs from the sale of the 545 shares of stock in question would, of course, be taxable 100 percentum under sec. 115 (g), even though the stock was not completely cancelled, if defendant had been able to submit sufficient evidence to show that in acquiring the stock the Eetail Credit Company cancelled or redeemed it at “such time and in such manner as to make the distribution and cancellation or redemption essentially equivalent to a taxable dividend,” but we have no such evidence and there is no basis in the facts of record for the inference that, in so acquiring the stock, there was present a scheme to make distributions in partial liquidation in the guise of purchasers of stock, and thereby enable the stockholders to escape or avoid the full normal and surtax on amounts which were in effect “distributions.”
We are not, therefore, justified in finding that the transaction in question was a distribution by the Eetail Credit Company in partial liquidation within the meaning of sec. 115 (c), (g), or (i). Plaintiffs are therefore entitled to the benefit of the capital gain provision of the taxing act.