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corporation’s assumption of his liability was a redemption of the
underlying stock and that the redemption and the payment of the
remaining owner’s note that became due in the year in question
were essentially equivalent to the distribution of a taxable
dividend. See id.
In a variation on Wall, in Sullivan v. United States, 363
F.2d 724 (8th Cir. 1966), the Court of Appeals for the Eighth
Circuit held that, if a buyer is subject to an executory, pri-
mary, and unconditional obligation to purchase the shares of the
seller, but instead causes the corporation to purchase those
shares, the purchase results in a constructive distribution to
the buyer, because it discharges his obligation. In Sullivan,
the Court of Appeals found that, after the transaction was
complete, (1) the taxpayer’s personal obligation to purchase the
stock had been discharged, (2) the taxpayer owned all of the
outstanding shares of stock of the corporation, (3) the corpora-
tion’s assets were decreased by the amount paid to the seller for
his stock, and (4) that stock was held by the corporation as
treasury stock. See id. at 729. Although the Court of Appeals
is not explicit on the point, it appears that it considered the
taxpayer as having constructively received the stock from the
seller, which stock the taxpayer then transferred to the corpora-
tion in consideration of the corporation’s constructive distribu-
tion to him in redemption of that stock. The Court of Appeals
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