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authority.
From its incorporation in 1962 through May 31, 1999,
petitioner has never paid cash dividends with respect to its
common stock. On July 6, 1984, petitioner distributed 14 shares
of its preferred stock with respect to each share of its common
stock. It has not since then distributed preferred shares with
respect to its common stock. Petitioner paid cash dividends on
its preferred stock in 1979, 1980, 1981, 1982, 1983, 1984, and
1985. From 1986 through May 31, 1999, petitioner did not pay
dividends on its preferred stock.
As previously discussed, Mr. Wechsler’s father died in June
1986 and bequeathed his 80 common shares in petitioner to Mr.
Wechsler, making Mr. Wechsler owner of 160 of petitioner’s then-
outstanding 255 common shares. The father left his preferred
shares in petitioner to two trusts primarily for the benefit of
his wife, Mr. Wechsler’s mother, with Mr. Wechsler and Gilbert
(the two sons of the father and mother) as remaindermen. The
father’s estate elected to pay the Federal estate tax it owed
under the installment provisions of section 6166. Mr. Wechsler’s
mother died on May 3, 1989, and her estate also elected to pay
the Federal estate tax it owed under the installment provisions
of section 6166. Mr. Wechsler and Gilbert were cofiduciaries of
the father’s estate, the mother’s estate, and the trusts that
their father and mother established.
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