- 18 -
Tax Regs. (applying sec. 31112 to distributions to shareholders
made by reason of the corporation-shareholder relationship and
not to transactions between a corporation and a shareholder in
his capacity as debtor, creditor, employee, or vendee, where the
fact that the distributee is a shareholder is incidental to the
transaction). Here the characterization issue is complicated by
the fact that the payors of the transfer fees become both equity
owners of petitioner and its primary customers, and that, by
becoming members, the payors of the transfer fees become entitled
to use the trading facilities of the exchange.
CBOT members’ use of petitioner’s trading facilities does
not prevent the transfer fees from being contributions to
capital. A payment by a member-owner of an organization can be a
contribution to capital even where the member-owners receive
goods or services from the corporation. See Concord Village,
Inc. v. Commissioner, supra (payments by members to a cooperative
housing corporation to fund a replacement reserve held to be
contributions to capital, even though members also leased
property from the corporation); Minnequa Univ. Club v.
Commissioner, T.C. Memo. 1971-305 (payments by members to an
12 The general nonrecognition rule of sec. 311(a), as
interpreted by this regulation, was repealed as part of the
fairly comprehensive repeal by the Tax Reform Act of 1986, Pub.L.
99-514, 100 Stat. 2085, of the statutory enactments of General
Utils. & Operating Co. v. Helvering, 296 U.S. 200 (1935). The
regulation was removed from the regulations in 1993 by T.D. 8474,
1993-1 C.B. 242.
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