Rose Ann Coates Trust, Appellants-Petitioners v. Commissioner of Internal Revenue, Appellee-Respondent

Sydney and Rose Ann Coates, together with their children, children’s spouses, and grandchildren, owned all of the shares of two corporations, CAM Industries, Inc. (hereinafter called CAM) and Washington Industrial Products, Inc. (hereinafter called WIP). After the death of Sydney Coates, the family group agreed to combine the two corporations by having CAM “purchase” the shares of WIP.

When the transaction was complete, CAM and WIP shares were held by members of the family as follows:

CAM

Class A Class B

WIP Voting Nonvoting

Estate of Sydney Coates 75 664

Robert N. Coates 51 1,640 2,250

Peter Coates 6 205

Cathy Coates 6 205

Pamela Coates 6 205

Charles N. Coates 6 205

Marjorie Coates (Mrs. Robt.) 290

R. Morgan Boyd 63 10 422

Robert M. Boyd, Jr. 6 391

James Boyd 6 391

Ruby Boyd (Mrs. R. M.) 390 372

A. C. Helnen 57 10 375

Barbara Helnen 6 340

Gary Helnen 6 340

Richard Helnen 6 340

Molly Heinen (Mrs. A. C.) 390 325

Totals 300 2,440 7,320

The “purchase” was effected on May 20, 1965 when CAM and the shareholders of WIP entered into agreements in this form:

AGREEMENT FOR SALE OF STOCK

Agreement made this 20th day of May, 1965, by and between the undersigned…