Boise Cascade Corporation v. United States

This appeal presents the question of whether payments made by Boise Cascade Corporation (“Boise Cascade”) to redeem stock held by its Employee Stock Ownership Plan are deductible as dividends paid pursuant to 26 U.S.C. § 404 (k). We conclude, under the circumstances presented by this case, that they are and affirm the judgment of the district court.

I

Boise Cascade is an integrated forest products and office products company headquartered in Boise, Idaho. It maintained the Boise Cascade Corporation Savings and Supplemental Retirement Plan (“Plan”) for its employees. Effective May 25, 1989, the Plan was amended to add an employee stock ownership plan (“ESOP”) component. A trust was established to hold and invest assets accumulated under the Plan. On July 10, 1989, in order to further the inclusion of the ESOP portion of the Plan, the Boise Cascade Board of Directors adopted a resolution creating a new series of convertible preferred stock consisting of 6,745,347 shares. Under the terms of the Certificate of Designation, the convertible preferred stock could only be issued to the Trustee of the fund; if the stock were transferred to any person other than the Trustee, the…