Ralph Penn v. Commissioner of Internal Revenue, Albert Penn v. Commissioner of Internal Revenue

These consolidated proceedings in volve deficiencies in gift taxes determined for 1946 against petitioner Albert Penn and for 1946 and 1947 against petitioner Ralph Penn. During these years, the taxpayers each made gifts of shares of Penn Electric Switch Company common stock and reported the values thereof per share on their respective gift tax returns for those years. The Commissioner determined that the fair market value of the above mentioned common stock was $20.00 per share on each of the respective dates of the gifts thereof, and issued notices of deficiency based on that determination. Trial was held before the Tax Court at which a stipulation of facts was introduced, which is here epitomized.

The Penn Electric Switch Company, hereinafter referred to as “Switch Company,” was an Iowa corporation with principal offices at Goshen, Indiana, incorporated in July, 1928, to take over the assets and business of a co-partnership of the same name. During the taxable years and for many years prior thereto, Albert Penn was president and chairman of the board of directors and Ralph Penn was vice-president and treasurer and a director of that company. At all times, Switch Company has…