¶1dissenting: I respectfully dissent from that part of the majority opinion which holds that the so-called sales of Theatrical Managers, Inc., stock by Gary Theatre Co. to the trusts created by Young and Wolf were not only dividends constructively paid by Gary Theatre Co. to Young-Wolf Corporation, but also constituted dividends constructively paid by Young-Wolf Corporation to its controlling stockholders.
¶2I agree with the majority opinion that the “trusts must be considered as having been selected by Young-Wolf Corporation for the purpose of distributing the property of Gary Theatre Co.” and that the rule enunciated in Palmer v. Commissioner, 303 U. S. 63, and Timberlake v. Commissioner, 132 Fed. (2d) 269, can not be circumvented by reason of the stockholder of the distributing corporation causing the distribution to be made to its nominees rather than to itself. Therefore I agree with the majority that Young-Wolf Corporation must be considered as having constructively received the dividend effected by the so-called sales of stock made by Gary Theatre Co. to the trusts.
¶3However, it is my opinion, contrary to that of the majority, that Young-Wolf Corporation can not be considered as having constructively declared a dividend itself of the dividend which it constructively received when it directed or authorized the so-called sales to trusts created by its own stockholders, and that its own stockholders can not be considered as having constructively received from it a dividend which it originally constructively received by reason of the actual receipt of the dividend in question by the trusts created by these same stockholders.
¶4Where Mr. A and Mr. B own in equal proportions the stock of the X Co., which, in turn, owns all of the stock of Y Co., and at a stockholders’ meeting of Y it is resolved that Y sell certain of its property at far less than market value to A and B in equal proportions, and this is done, it might be considered that A and B have received a taxable dividend by ignoring the corporate entity of X and considering A and B as, in reality, the stockholders of Y to whom Y has distributed a dividend; or it might be considered that A and B have received the dividend effected by the sales as the nominees of X, so that X is to be treated as having constructively received a taxable dividend, in which case the corporate entity of X will not be ignored; but I am unable to agree with the majority that one actual receipt of property as a result of a so-called sale can be the basis of two different consecutive constructively received dividends.
¶5I would, therefore, conclude contrary to the majority that, while Young-Wolf Corporation received a dividend from the Gary Theatre Co. as a result of the so-called sales by the latter company to the trusts created by petitioner Young and Wolf, this was the only dividend received or paid in the transaction involved in this proceeding.