Before McLAUGHLIN, KALODNER and HASTIE, Circuit Judges.
The petitioner, Joseph L. O'Brien Co., filed this petition to review the decision of the Tax Court*fn1 which rejected its contention that it was entitled to a dividends-received deduction for 1955 under the provisions of the Internal Revenue Code of 1954*fn2
The single issue presented is whether petitioner was the beneficial owner of stock on the record date on which a certain dividend was declared payable under the terms of a contingent contract of sale entered into prior to that date and consummated thereafter.
The facts as stipulated and found by the Tax Court are substantially as follows:
The petitioner is a corporation organized on December 22, 1954, under the laws of Pennsylvania. Its first income tax return was for the period December 22, 1954, to December 31, 1954. Thereafter its returns were filed on a calendar year cash basis. The taxpayer's return for the year 1955, the year involved herein, was filed with the District Director of Internal Revenue at Philadelphia, Pennsylvania. Accompanying the filing of its first return was a letter to the Director which contained the following:
"This Corporation was organized under the laws of the State of Pennsylvania on December 22, 1954. From that date to December 31, 1954, there were no Assets or Liabilities acquired and there was no business transacted which would reflect Income or Expenses."
On December 7, 1954, American Locomotive Company ("American") wrote to Sutro Brothers & Company, stockbrokers ("Sutro"), to confirm an understanding regarding the proposed purchase by Sutro from American of 53,000 shares of the outstanding common stock of General Steel Castings Corporation, a Delaware corporation ("General"), as follows:
"This will serve to confirm our understanding with you relative to your purchase of 53,000 shares of the outstanding common stock of General Steel Casting Corporation, of which we are now the owner.
"Subject to the provisions set forth below, we agree to sell such shares to you, and you agree to buy the same from us, at a purchase price of $20.00 per share, making an aggregate purchase price of $1,060,000. It is understood that no commissions will be payable by us in connection with this transaction, and by ...