Stephen F. Heringer, Mabel H. Heringer, John F. Heringer, and Alta G. Heringer v. Commissioner of Internal Revenue

John F. and Stephen Heringer and their wives Mabel H. and Alta G. respectively, and hereafter petitioners, ap-. pear from the record to be thrifty people who have conducted successful farming operations during the years. Each couple has several children. On or about January 5, 1947 petitioners concluded that the major portion of their property should be transferred to a corporation, whose stock was to be distributed between parents and children. Pursuant thereto they caused to be incorporated Vorden Farms, Inc.i hereafter the corporation. The corporation issued 50;000 shares of stock. In payment for these shares the corporation received the sum of $50,000. Petitioners each received 5000 shares, a total of 20,000 shares which constituted forty percent of the 50,000 shares issued. The two couples have eleven children, some of whom received 2500 shares while others received 3000.

On December 28, 1948 the petitioners transferred to the corporation a one half interest in certain farm lands owned by them, and on January 5, 1949, conveyed the remaining one half interest. No consideration for the transfer was given or promised. It is stipulated that the fair market value of the land is…