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shares held a ‘contra value’ to petitioner in both tax years of
$53,999. We disagree.
New York Business Corporation Law sec. 102(a)(14) (McKinney
2003) defines treasury shares as: “shares which have been
issued, have been subsequently acquired, and are retained
uncancelled by the corporation. Treasury shares are issued
shares, but not outstanding shares, and are not assets.”
Petitioner argues that even though it purchased the
acquired shares, and the shares remain uncanceled, they
nonetheless have a ‘contra value’, and, while not assets, the
shares are still held “by value” in accordance with section
448(d)(2)(B) and section 1.448-1T(e)(5)(i), Temporary Income Tax
Regs., supra. We disagree with petitioner’s creative
characterization of its treasury shares.
Treasury stock, while held by a corporation, has no value.
Christie v. Fifth Madison Corp., 211 N.Y.S.2d 787, 796 (App.
Div. 1961). Treasury stock has no value because it carries no
voting rights, rights to dividends, or rights to distributions.
Id. Treasury shares are actually a legal fiction and a figure
of speech only used to explain the rights and rules that apply
upon their reissue. Id. at 796. Treasury stock, therefore, is
not an “asset” of the corporation. Its only value is what
petitioner might receive in consideration for its reissuance.
In this case, when petitioner acquired its stock, the stock
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