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stock certificate was issued which represented that the taxpayer
owned 30,250 shares of stock. The taxpayer and the other
shareholders paid debts of the corporation. Subsequently, a new
stockholder was brought in and paid $43,000 in exchange for
20,000 shares.
In Miller v. Commissioner, supra, this Court cited Morgan v.
Commissioner, 46 T.C. 878, 890 (1966), where it was reasoned that
"when stock is paid for, it is normally considered issued in
fact, irrespective of the manual issuance of the certificate."
The taxpayer in Miller v. Commissioner, supra, believed that, by
paying one-half of the corporate expenses, such payments would be
applied towards the purchase of his stock. The taxpayer's only
monetary contribution at the time of incorporation was a $210
incorporation fee. Because 100,000 shares of stock were
authorized, as a 50-percent owner, the taxpayer in Miller would
have received 50,000 shares. This, along with the fact that the
new shareholder paid $43,000 for her 20,000 shares, evidenced the
fact that the $210 initial payment was not consideration for the
stock.
While Morgan v. Commissioner, supra, does not require the
issuance of a certificate to evidence the fact that stock was
issued, in the instant case, the minutes of Diamond's meeting
clearly state that 10,000 shares were authorized and were issued
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