¶1concurring: I concur in the result on the dividend issue, because as I read it and as the majority Opinion seems to me to demonstrate, the applicable statute precludes the contrary result. It may serve some helpful purpose, however, to point out that, prospectively at least, Congress has now legislated to eliminate the avenue by which the controlling stockholders of corporations in situations such as those herein have managed to steer corporate distributions through section 115 (d) of the Internal Revenue Code of 1939 rather than section 115 (a).
¶2Under the applicable statute, a corporation, by distributing money borrowed against unrealized appreciation or anticipated earnings or profits, could effect a distribution, which, under section 115 (d), would to its shareholders be a capital distribution taxable as capital gain, even though through application of subsequent earnings or profits in repayment of the loan the prior distribution in the end becomes an effective distribution of earnings or profits so applied, thus bypassing section 115 (a), under which the distribution of such earnings or profits would have been a dividend taxable to the shareholders as ordinary income. The controlling effect of section 115 (a) in limiting dividend treatment to distributions by a corporation “out of its” accumulated earnings or profits is, it seems to me, all the more pointed in cases such as we have here, since in the absence of a provision to the contrary the corporation laws of the various States, as I under-' stand them, not only permit distributions out of or against unrealized appreciation but, for the purposes of the distributions, such appreciation is treated as surplus and the distributions as dividends which do not impair capital.
¶3By section. 312 (j) of the Internal Revenue Code of 1954, it is now provided that in cases where, through the guaranteeing of loans by the United States, a corporation has been able to borrow money against its assets so as to make possible distributions of the character herein involved, then, for the purpose of determining the amount of earnings or profits available to the corporation for the payment of dividends, the earnings or profits are to be increased to the extent that the amount of the loan exceeds the adjusted basis of the property to the corporation. For reasons of its own, however, Congress has fixed the effective date of section 312 (j) at June 22, 1954, and it does not apply to distributions made prior to that date, as were the distributions herein. The Committee on Finance did indicate in its report to the Senate that in proposing enactment of the said section no implication was intended to be drawn with respect to any decision made or litigation pending “under present law with respect to this subject matter, whether or not such loans are made, guaranteed, or insured by the United States.” S. Rept. No. 1622, 83d Cong., 2d Sess., p. 251.