# John H. Rickey and Lorraine C. Rickey v. Commissioner of Internal Revenue

> Court of Appeals for the Ninth Circuit · July 19, 1974 · 502 F.2d 748

URL: https://www.frixlaw.com/law-library/cases/9461008

## Case

- **Full name:** John H. RICKEY and Lorraine C. Rickey, Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Appellee
- **Court:** Court of Appeals for the Ninth Circuit
- **Decided:** July 19, 1974
- **Citations:** 502 F.2d 748; 34 A.F.T.R.2d (RIA) 6359; 1974 U.S. App. LEXIS 7550
- **Precedential status:** Published
- **Opinion:** Concurrence by Hufstedler
- **Judges:** Hufstedler, Anderson, Koelsch
- **Cited by:** 12 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9461008

## Opinion text

HUFSTEDLER, Circuit Judge
(specially concurring):
I concur fully in my brother Koelsch’s rationale in disposing of the section 453 issue. I reach his result in deciding the section 1244 issue, but by a different path.
I would not adopt the reasoning of Judge Friendly in Godart v. Commissioner (2d Cir. 1970) 425 F.2d 633 and of the other cases of Judge Friendly’s persuasion- that Judge Koelsch has collected. The requirement that “there must be some substantially contemporary objective evidence that the plan was adopted with § 1244 in view” ( 425 F.2d at 638 ), when applied to disqualify a plan that follows all of the objective criteria of section 1244, attributes to *756 Congress an unreasonably mystical approach to business financing. 1
Rather, I think that the issue is controlled by Warner v. Commissioner (9th Cir. 1968) 401 F.2d 162 . Warner struck down an otherwise qualifying plan because the plan did not contain terms explicitly requiring that the stock be sold within the requisite two-year period. Warner could have applied section 1244 and 26 C.F.R. § 1.1244 (c)-l(c) less mechanically, but Warner is the law of this circuit, and it disqualifies Rickey’s plan.
. It is also curious that, although § 1244 was intended to encourage investors to commit their funds to small business corporations, Godart requires that the corporation have § 1244 in mind. It is not inconceivable that an investor would buy stock due to the § 1244 incentive even though the corporation in which he was investing did not have the section in mind. ■ Such an investor’s purchase of stock would serve the congressional purpose; the Godart requirement, however, would deny him the section’s benefits.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9461008. Public record. Not legal advice.