Berliner

The Southern Pacific Company paid under protest an amount of stamp taxes assessed under sections 1800 and 1802(a) of the Internal Revenue Code, 26 U.S.C.A. §§ 1800 , 1802(a) and sued unsuccessfully to recover the payment.

The Company was organized under the laws of Kentucky. 1 In 1940 it had outstanding 3,772,763.0564 shares of capital stock having a par value of $100 a share, of which all but 210,157 shares were issued at par. The 210,157 shares were issued at a premium of $6,304,845 over par. 2 In 1940 the Company, pursuant to an amendment of its charter and with the approval of the Interstate Commerce Commission, issued in exchange for its then outstanding par value stock an identical number of shares of no-par value stock. The no-par shares were issued to the holders of the par value shares only, in exchange for the shares then held. In connection with the charter amendment and the exchange no new money was paid in and no property transferred to the Company.

As an operating carrier the Company was subject to the I.C.C.’s accounting regulations. At the time of the exchange the Commission’s regulations and forms provided, among other things, for two accounts, numbered 751 and…