Fred J. Tabery and Leone M. Tabery, on Review v. Commissioner of Internal Revenue, on Review

Before us is a petition for review of a Tax Court decision holding that the petitioners were deficient in the payment of their joint income tax for the year 1960. The opinion by Judge Fay of the Tax Court is found at 23 CCH Tax Ct. Mem. 1108 , P-H Tax Ct. Mem. 64,189 (1964).

The issues are (1) whether the Tabery Corporation [hereinafter called Tabery] redeemed, within the meaning of § 317 (b) of the Internal Revenue Code of 1954, eighty shares of its stock from petitioners Fred J. Tabery and Leone M. Tabery [hereinafter called taxpayer] on July 31, 1960, and (2) if so, whether or not the distribution made by Tabery was essentially equivalent to a dividend, i. e., whether the distribution is to be treated as a capital exchange under §. 302 or as a dividend under § 301. The facts, as stipulated by the parties and as found by the Tax Court, aré as follows:

Taxpayer is the sole shareholder of Tabery, a California corporation principally engaged in the business of the decoration, operation, and promotion of trade association shows and the construction of street and building displays throughout the United States. Tabery maintains books by the accrual method with a fiscal year ending…