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(2) property.[6]
In Frederick Weisman Co. v. Commissioner, supra at 574, we
observed that “In two prior opinions we stated that such stock
redemptions for cash come squarely within the terms of section
311(a). Harder Servs., Inc. v. Commissioner, supra [67 T.C. 585
(1976)]; Proskauer v. Commissioner, supra [T.C. Memo 1983-295].”
“Here the stock was redeemed from petitioner’s shareholders in
their capacity as shareholders, and hence section 311(a) comes
into operation.” Id.7
6 The meanings of the terms “property” and “redemption” are
set forth in sec. 317, which provides:
SEC. 317. OTHER DEFINITIONS.
(a) Property. -- For purposes of this part, the
term “property” means money, securities, and any other
property; except that such term does not include stock
in the corporation making the distribution (or rights
to acquire such stock).
(b) Redemption of Stock. For purposes of this
part, stock shall be treated as redeemed by a
corporation if the corporation acquires its stock from
a shareholder in exchange for property, whether or not
the stock so acquired is cancelled, retired, or held as
treasury stock.
7 We have also held in other cases that sec. 311 bars the
deduction of amounts paid to redeem stock. E.g., Roberts &
Porter, Inc. v. Commissioner, 37 T.C. 23 (1961), revd. on other
grounds 307 F.2d 745 (7th Cir. 1962); accord Stokely-Van Camp,
Inc. v. United States, 21 Cl. Ct. 731, 754 (1990), affd. 974 F.2d
1319 (Fed. Cir. 1992). Compare H. & G. Industries, Inc. v.
Commissioner, 495 F.2d 653, 657 (3d Cir. 1974), affg. 60 T.C. 163
(1973), where the Court of Appeals for the Third Circuit found it
unnecessary to decide that issue. The applicability of sec.
311(a) was not argued in Five Star Manufacturing Co. v.
(continued...)
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