Opinion
January, 1935.
Present — Hill, P.J., Rhodes, McNamee, Crapser and Bliss, JJ.
The relator, a real estate corporation, had a capital of $10,000 and an earned surplus of $349,802.51. From July 10 to September 18, 1931, five corporations were organized and the capital stock was acquired by one corporation. All these corporations had the same stockholders and the same officers. A part of the $349,802.51, earned surplus of the parent corporation, was transferred in different proportions to the corporations thus organized and for it capital stock of the new corporation, of no par value, was transferred to the parent corporation and by it distributed to stockholders. Question whether taxable under subdivision 1 of section 182 Tax of the Tax Law as a dividend. It was so taxed by the State Tax Commission. The surplus thus transferred to these different corporations would not be taxable if distributed by them, because it would have been paid in surplus rather than the earned surplus. Determination unanimously confirmed, with fifty dollars costs and disbursements.