Harry D. Bledsoe and Annie L. Bledsoe - Page 17

                                                - 17 -                                                  

            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                                 
                  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                            
                  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                            

Page:  Previous  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  Next

Last modified: May 25, 2011