- 73 -
rejected the taxpayer’s argument that he had received a distribu-
tion in redemption of shares that was a distribution in full
payment in exchange for the stock and not a redemption essen-
tially equivalent to a dividend. See id. at 729-730.
Thus, if a buyer wishes to accomplish a bootstrap acquisi-
tion, the buyer, once having put the Wall type format into
legally enforceable form, cannot avoid the tax consequences of a
redemption from him of the seller’s stock by having the corpora-
tion pay the seller directly. Nevertheless, if the corporation
simply agrees to redeem the seller’s stock and pays for the stock
in installments, over time, and the payments do not discharge any
obligation of the remaining owner, the payments do not constitute
constructive distributions to the remaining owner. See Edenfield
v. Commissioner, 19 T.C. 13 (1952). That is true even if the
remaining owner guarantees performance by the corporation,
pledges his shares as security for the deferred payments, or
agrees to buy the shares if the corporation defaults. See id.;
Buchholz Mortuaries, Inc. v. Commissioner, T.C. Memo. 1990-269;
Rev. Rul. 69-608, 1969-2 C.B. 42 (Situation 5).
The logic of the bootstrap acquisition cases leads to the
conclusion that, where the buyer has already purchased the
seller’s stock, as in Wall v. United States, supra, or has a
primary and unconditional obligation to do so, as in Sullivan v.
United States, supra, the transfer of that stock to the corpora-
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